CKE Restaurants Inc. shares posted a strong gain Tuesday for the second consecutive day after the Anaheim operator of fast-food chains said sales are improving at its struggling Hardee's restaurants.
The stock rose 18%, or $4.38 a share, to $28.81 on trading of 2.24 million shares, more than three times the average daily volume over the last three months. On Monday, the stock climbed 14%, or $3 a share.
Hardee's, which hurt its bottom line with profit-eroding discounts, is offering better ingredients and service, among other initiatives, at its more than 2,800 restaurants, analysts said. Sales at Hardee's open at least a year, which have declined for several quarters, are on track to meet diminished analyst expectations.
"As sales start to stabilize, earnings visibility improves and valuation becomes more appealing," Merrill Lynch & Co. analyst Peter Oakes said Monday in a report. He raised his rating on the stock to "near-term accumulate" from "near-term neutral."
CKE is expected to initiate a wide range of improvements at its stores next year, said Anton Brenner, a Cruttenden Roth Inc. analyst who started coverage Tuesday with a "strong buy" rating. The changes include charbroiling Hardee's hamburger and chicken sandwiches, upgrading equipment and remodeling.