CKE Restaurants Inc. (NYSE:CKR) had soared 16.6% through June 27 on the heels of its restructuring efforts. However, hope and enthusiasm for CKE's future faced the reality of its present on June 28, when the stock sank 5.6% on its earnings report.

So what happened?
CKR reported EPS of $0.23 for its fiscal first quarter ended May 21, compared to $0.23 in the year-ago period. More importantly to investors, earnings fell far short of consensus expectations for $0.28, as compiled by Thomson Financial.

Revenue managed to increase 1.6% in the 16-week period, as 1.8% same-store sales growth at company-operated Hardee's locations was partly offset by flat sales levels at Carl's Jr. spots.

The problem was, operating margin contracted 90 basis points, thanks to $1.3 million in costs and startup inefficiencies related to the relocation of the Carl's Jr. distribution center. And the burger-flipper posted a $1.3 million increase in non-cash share-based compensation expense, to boot. So it was not obviously apparent in the EPS bottom line that management had employed serious capital, reducing share count by 6.8% from last year's level.

Hope springs eternal ...
CKE is in the midst of a strategic improvement plan, refranchising operations and remodeling and dual-branding its stores with its Green Burrito and Red Burrito concepts, while agreeing to dispose of the stale La Salsa Fresh Mexican Grill concept in late May.

After dropping some extra weight Thursday, the shares trade at roughly 20.5 times the fiscal 2008 consensus EPS estimate of $0.99, but that's before the inevitable adjustment to the estimate to account for the $0.05 miss this quarter. It also doesn't take into account the factoring in of new expectations for the quarters ahead. If we simply reduce the old estimate by $0.05, to $0.94, the P/E would be 21.6. At that level, the shares trade at a discount to Wendy's (NYSE:WEN), with its forward P/E of 32, and a premium to McDonald's (NYSE:MCD), at 19 times its forward number. But is CKR in the same league? Compared to the more similar Steak n Shake (NYSE:SNS) and its fiscal-year '07 P/E of 23, the stock seems to offer some opportunity for operations improvement. The question is, when will earnings misses transition to consistent upward surprises, if ever?

Despite the potential for improvement, this Fool would stay away from CKR in the near term, based on the magnitude of this miss and the amount of recently gained profits that could still be returned.

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Markos Kaminis has no ownership interest in any of the companies discussed here. However, he'll gladly pay you Tuesday for a cheeseburger today. The Fool has a disclosure policy.