WRAPUP 3-DineEquity, Domino's give back gains on results
* DineEquity Q1 adj EPS $1.08 vs Street view 78 cents
* Applebee's same-restaurant sales down 2.7 pct
* Domino's EPS ex-items 35 cents vs Street view 33 cents
* Domino's U.S. same-store sales jump 14.3 percent
* DineEquity stock down 11.5 pct; Domino's off 10 pct (Adds Domino's executive comment; updates share moves)
By Lisa Baertlein and Brad Dorfman
LOS ANGELES/CHICAGO, May 4 (Reuters) - Shares in restaurant chains DineEquity Inc (DIN.N) and Domino's Pizza Inc (DPZ.N) gave back some gains on Tuesday, as better-than-expected results were insufficient to keep their lofty valuations afloat.
Shares in DineEquity were off 11.5 percent in early trading, while Domino's stock shed 10 percent.
DineEquity's year-to-date share gain was up 75 percent at the close of business on Monday. Domino's stock was up 92 percent over the same period.
Restaurant shares have made bigger gains than the entire market with signs that the U.S. economy is healing and consumers are starting to spend again. The Dow Jones U.S. Restaurant and Bars index .DJUSRU, fell 2.4 percent as investors fretted that the financial rescue package for Greece may not be enough to prevent a broader sovereign debt crisis in the euro zone.
DineEquity, which is working to turn around its Applebee's chain, reported quarterly adjusted profit of $1.08 per share to beat the Street's view by 30 cents a share. [ID:nN04223281]
"On the surface the results were better than the Street expected," Morgan, Keegan & Co analyst Destin Tompkins told Reuters.
While sales at DineEquity's established Applebee's restaurants fell less than they did a year earlier, traffic declined at company-operated outlets and guests spent less per visit -- despite advertising to boost visits and sales.
Applebee's company-operated operating margin fell to 14.8 percent from 16.3 percent a year earlier.
Tompkins said that decline may have contributed to the share drop. He added that because of the company's debt load, "it has more extreme moves" than the overall restaurant group.
Applebee's, like Brinker International Inc's (EAT.N) Chili's restaurant chain, operates in the crowded market for bar-and-grill restaurants. Such restaurants have offered traffic-generating but potentially profit-squeezing special deals to attract consumers.
Domino's, meanwhile, went past typical promotions and completely revamped its U.S. pizza recipe to address consumer perceptions that its pies were among the worst-tasting in the industry. [ID:nN04242442] U.S. sales at restaurants open at least a year jumped 14.3 percent.
"The expectations got a bit too lofty ... 14 (percent), I guess, is not good enough," said Buckingham Research analyst Mitchell Speiser.
Some analysts were looking for a U.S. same-store sales leap of about 20 percent, and investors are now focused on how sustainable such gains will be.
Domino's President and Chief Executive Patrick Doyle said on a conference call that the company does not expect to maintain the "rare" pace of sales growth seen in the first quarter.
Still, Doyle said he expects "solid" growth the U.S. pizza business for the second quarter.
The pizza chain, which like DineEquity has cut its debt load, reported a profit excluding items of 35 cents per share, beating the Street view by 2 cents per share.
Shares in DineEquity were down 11.5 percent to $37.63. Domino's stock was down 10 percent to $14.46. (Reporting by Lisa Baertlein and Brad Dorfman; editing by Michele Gershberg and John Wallace, Leslie Gevirtz)
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