Denny's (DENN) AI Stock Analysis

• Market Cap: $276.55M
• Dividend Yield: N/A
• Average Volume (3M): 796.30K
• Price to Earnings (P/E): 17.3
• Beta (1Y): 0.99
• Revenue Growth: 0.06%
• EPS Growth: -12.14%
• Country: US
• Employees: 3,800
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.09
• Shares Outstanding: 51,498,993
• 10 Day Avg. Volume: 881,315
• 30 Day Avg. Volume: 796,296
• PEG Ratio: 1.03
• Price to Book (P/B): -9.06
• Price to Sales (P/S): 0.68
• P/FCF Ratio: 335.70
• Enterprise Value/Market Cap: 2.27
• Enterprise Value/Revenue: 1.39
• Enterprise Value/Gross Profit: 3.36
• Enterprise Value/Ebitda: 10.35
• 1Y Price Target: $5.50
• Price Target Upside: 3.19% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 60 Neutral
• Price Target: $4.00 ▼(-24.95% Downside)

Denny's overall stock score reflects a balance of strengths and challenges. The company's reasonable valuation and strategic initiatives, such as debt refinancing and digital enhancements, are positive. However, financial instability due to high leverage and stagnant growth, along with mixed earnings call sentiment, weigh on the score.

Positive Factors

Digital Enhancements

Investments in digital platforms have boosted off-premise sales, enhancing customer engagement and expanding revenue streams, which is crucial for long-term growth.

Debt Refinancing

Refinancing efforts aim to address existing debt, potentially improving financial stability and market positioning by reducing debt-related pressures.

Loyalty Program Launch

The new loyalty program is expected to drive customer traffic and enhance brand loyalty, contributing positively to long-term revenue growth and customer retention.

Negative Factors

High Leverage

High leverage and negative equity indicate financial instability, which could limit operational flexibility and increase risk in economic downturns.

Stagnant Revenue Growth

Stagnant revenue growth suggests challenges in expanding market share and increasing sales, which may impact long-term profitability and competitiveness.

Decline in Same-Restaurant Sales

Declining same-restaurant sales reflect challenges in maintaining customer traffic and market share, potentially impacting future revenue and profitability.

Denny's Business Overview & Revenue Model

Company Description

Denny's Corporation, through its subsidiary, Denny's, Inc., owns and operates full-service restaurant chains under the Denny's brand. As of December 29, 2021, it had 1,640 franchised, licensed, and company restaurants worldwide. The company was formerly known as Advantica Restaurant Group, Inc. and changed its name to Denny's Corporation in 2002. Denny's Corporation was founded in 1953 and is based in Spartanburg, South Carolina.

How the Company Makes Money

Denny's generates revenue primarily through its company-owned restaurants and franchise operations. The revenue model includes sales from food and beverages sold at its locations, which are complemented by a robust takeout and delivery service. Franchise fees and ongoing royalties from franchised locations also contribute significantly to Denny's earnings. Key revenue streams include in-store dining, takeout services, and catering options, with a focus on high-margin items on their menu. Additionally, strategic partnerships with delivery platforms expand their customer base and drive sales, particularly in urban areas where convenience is paramount.

Denny's Financial Statement Overview

Summary

Denny's demonstrates solid operational efficiency with healthy gross margins and strong cash generation relative to net income. However, it struggles with profitability, high leverage, and stagnant revenue growth, posing risks to long-term stability.

Income Statement

Denny's has shown a mixed performance in their income statement. The TTM Gross Profit Margin is approximately 41.29%, which is healthy for the restaurant industry, indicating effective cost management. However, the Net Profit Margin for the TTM is notably low at 3.79%, suggesting thin net profitability. The Revenue Growth Rate from the previous annual report to TTM is approximately 0.37%, indicating stagnant revenue growth. The EBIT and EBITDA margins are also modest at 9.27% and 13.46% respectively, reflecting moderate operating efficiency. Overall, while the company maintains decent gross margins, net profitability and growth remain areas for improvement.

Balance Sheet

Denny's balance sheet reveals significant challenges. The Debt-to-Equity Ratio is negative due to negative stockholders' equity, highlighting a high leverage situation. This is a potential risk factor as it indicates financial instability. The Return on Equity (ROE) is not calculable due to negative equity, complicating profitability assessments. The Equity Ratio is also negative, signifying that liabilities exceed assets. These metrics point to a highly leveraged and precarious financial position that could impact long-term stability.

Cash Flow

Cash flow analysis shows some positive aspects amidst challenges. The Operating Cash Flow to Net Income Ratio is a strong 1.99, indicating robust cash generation relative to net income. However, Free Cash Flow Growth Rate from the last annual report to TTM is approximately 66.01%, suggesting volatility in cash flow management. The Free Cash Flow to Net Income Ratio is 0.09, which is quite low, indicating that a minimal portion of earnings is translating into free cash flow. While operational cash flow strength is a positive, overall cash flow management requires consistency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	454.00M	452.33M	463.92M	456.43M	398.17M	288.61M
Gross Profit	187.43M	332.11M	153.87M	141.64M	142.10M	79.69M
EBITDA	60.75M	62.08M	63.77M	78.80M	75.55M	25.15M
Net Income	17.21M	21.57M	19.95M	74.71M	78.07M	-5.12M
Balance Sheet
Total Assets	488.07M	496.27M	464.82M	498.33M	435.53M	430.95M
Cash, Cash Equivalents and Short-Term Investments	1.04M	2.80M	6.17M	5.27M	33.17M	6.16M
Total Debt	415.45M	408.20M	395.26M	411.45M	324.82M	379.76M
Total Liabilities	524.50M	530.30M	527.50M	535.45M	500.79M	561.39M
Stockholders Equity	-36.42M	-34.02M	-62.69M	-37.12M	-65.27M	-130.45M
Cash Flow
Free Cash Flow	1.52M	918.00K	62.15M	27.61M	68.82M	-10.10M
Operating Cash Flow	34.29M	29.49M	72.13M	39.45M	76.17M	-3.14M
Investing Cash Flow	-28.52M	-26.67M	-7.56M	-86.60M	29.01M	4.65M
Financing Cash Flow	-5.89M	-6.01M	-63.19M	20.04M	-78.45M	-994.00K

Denny's Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.33
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DENN, the sentiment is Positive. The current price of 5.33 is above the 20-day moving average (MA) of 4.95, above the 50-day MA of 4.39, and above the 200-day MA of 4.63, indicating a bullish trend. The MACD of 0.26 indicates Negative momentum. The RSI at 63.43 is Neutral, neither overbought nor oversold. The STOCH value of 47.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DENN.

Denny's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAKE	68 Neutral	2.73B	16.71	39.63%	1.97%	4.77%	38.24%
PBPB	68 Neutral	515.34M	47.84	69.01%	―	-1.72%	-70.31%
BJRI	67 Neutral	669.70M	25.46	7.12%	―	4.07%	-1.24%
DENN	60 Neutral	$276.55M	17.31	-63.40%	―	0.06%	-12.14%
CBRL	58 Neutral	1.01B	21.26	10.05%	2.20%	0.37%	12.99%
NDLS	41 Neutral	28.75M	-0.66	649.09%	―	-1.23%	-68.38%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

Denny's Corporate Events

Denny’s Reports Q2 2025 Financial Results

On August 4, 2025, Denny’s Corporation reported its second-quarter 2025 results, highlighting a total operating revenue of $117.7 million and a net income of $2.5 million. The company focused on strategic initiatives such as innovating Denny’s value platform and expanding Keke’s portfolio by 7% year-to-date. Despite challenges, Denny’s achieved a 3.5% reduction in corporate administrative expenses and refranchised three Keke’s cafes. The company aims to continue delivering shareholder value through balanced investments and share repurchases.

Denny’s Announces Debt Refinancing Plans

Denny’s Corporation has announced plans to undertake refinancing transactions aimed at addressing nearly all of its existing debt, which is due by August 26, 2026. This move is expected to impact the company’s financial structure and potentially improve its market positioning by alleviating debt-related pressures.