Similar to people who starve themselves the day after indulging in a steak dinner with all the trimmings, Morton's Restaurant Group's stock is suffering from a little guilt--at least by association.

The company recently changed its name from Quantum Restaurant Group to reflect the star quality of its strongest brand, the 34-unit upscale

Morton's of Chicago (MRG:NYSE)

steak house. It also operates 18 Mick's in the casual eatery sector; nine Peasant Restaurants, which, oddly enough, feature upscale American cuisine; and six Bertolini's Authentic Trattorias, a casual Italian concept.

But that smorgasbord of different restaurant offerings has failed to deliver much punch for Morton's. Allan Hickok, an analyst with Piper Jaffray in Minneapolis, says Morton's is suffering from sluggishness in the restaurant sector. He adds that a number of bellwether stocks, like

Outback Steakhouse (OSSI:Nasdaq)


Lone Star Steakhouses & Saloon (STAR:Nasdaq)

, reported softer than expected earnings, partially due to rising labor and food costs, which continue to squeeze margins.

But unlike those companies, Morton's has consistently beat analysts' estimates. That makes this one cow (albeit a cooked one) that runs with the bulls. With the stock down $4 from its 52-week high of $19 a share, Mark Sheridan, an analyst with Johnson Rice & Co. in New Orleans considers it a bargain. On Monday, Morton's finished at $15 +.

Sheridan and Hickok base their buy recommendations mainly on the company's core Morton's of Chicago concept. Here's what they like about it:

+ Morton's of Chicago posts consistently strong same store sales gains, up 10.2 percent for the first six months of 1996. (Bertolini's same store sales gains have been the company's second strongest, a 6.1 percent jump for the first half of 1996. But those gains have been slashed by the lagging Mick's and Peasant concepts, down 9.9 percent and 10.7 percent respectively for the same period, reducing overall same store sales to 2.1 percent.)

+ Morton's of Chicago has the potential to more than double its size, according to Stacy Jamar, an analyst with Oppenheimer & Co. in New York, by expanding into the suburbs of major cities and tapping the international market.

+ It's a niche leader in the booming upscale steakhouse segment. With 34 units, Morton's is far ahead of competitors Lone Star Steakhouses & Saloon, which entered the upscale segment when it bought Del Frisco's last summer. The unit has only two restaurants operating. Competitor

Longhorn Steaks (LOHO:Nasdaq)

recently entered the high end market when it acquired Capital Grille--but that only has five units operating.

+ With 90 percent of customers spending more than $60 a person on expense accounts, Jamar said, Morton's is benefiting from the strong business climate. Sheridan counters worries that expense accounts are a weak point in a recession by saying "the most vulnerable thing about expense accounts was when the government cut business meal deductibility to 50 percent.

Morton's survived that."

Additionally Morton's Restaurant Group seems to have gotten its Mick's and Peasant Achilles heel under control. The company put the two divisions up for sale a year an a half ago, but when there were no takers it began closing unprofitable units. Nine Mick's and Peasant Restaurants outside the Atlanta market have been closed so far this year, with five more slated for the ax.

The closings reduced Mick's and Peasant losses before income taxes to $394,000 for the first nine months of 1996, compared with $1.7 million for the same period last year. Morton's chief financial officer, Thomas J. Baldwin said the two divisions made $200,000 in the third quarter of 1996.

Going forward, Baldwin said the company will continue its policy of closing unprofitable Mick's and Peasant Restaurants, while trying to sell the remaining 19 units in Atlanta.

The gristle, though, is that analysts remain skeptical about Morton's ability to sell the remaining Mick's and Peasants as a going concern. "They are restaurants that make very little money sitting on short term leases, so the prospect for selling is not that high." Sheridan said. "I like to see that they're getting rid of the losers."

By Suzanne Kapner