A Second Look: O'Charley's Inc.

NEW YORK - Shares of O'Charley's Inc. rose Friday along with the rest of the market despite at least two Wall Street analyst notes that called the company's latest quarterly results painful and disappointing.

Shares climbed 69 cents, or 10 percent, to $7.56 in afternoon trading.

The boost came as the Dow Jones Industrials gained 200 points, with investors appearing to ignore economic news showing a big drop in personal spending. Some investors may be trying to buy stocks at bargain prices.

Restaurant stocks have taken a big beating as consumer spending has slowed. Before Friday's boost, O'Charley's shares were trading 58 percent off their high point for the past 52 weeks of $16.36. The shares last traded at that price in December.

The rise in the stock price Friday came after O'Charley's reported a wider loss in its third quarter, discontinued its quarterly dividend and suspended its earnings guidance for the rest of the fiscal year.

The loss stemmed mainly from a drop in same-store sales, or sales at locations open at least a year, at all three of the company's restaurant chains and lower-than-expected margins.

Morgan Keegan analyst Robert M. Derrington said in a note to investors that "it was a difficult quarter."

Derrington, who rates the company "Market Perform," said he now projects an operating loss for both this year and next year.

Avondale Partners analyst Amy Vinson said in a client note that guest traffic was also off at all three restaurant concepts, "and realistically, this is not something that we expect to see change in the near term."

Vinson cut her price target to $10 from $14.

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