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Denny's Corp. (DENN)
NASDAQ:DENN
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Denny's (DENN) AI Stock Analysis

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DENN

Denny's

(NASDAQ:DENN)

Rating:60Neutral
Price Target:
$4.00
▼(-16.84% 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
Customer Base Expansion
The value offerings, including promotions like Buy One Slam Get One for $1, attracted new and lapsed customers, expanding Denny's customer base.
Earnings
Denny’s reported operating results that beat revenue consensus, indicating strong performance in the market.
Negative Factors
Cost Pressures
DENN was pressured by higher commodity costs, Keke’s inefficiency costs as new units ramp, and higher marketing costs.
Profit Margins
Higher commodity costs and inefficiency costs from new units pressured Denny's profit margins.

Denny's (DENN) vs. SPDR S&P 500 ETF (SPY)

Denny's Business Overview & Revenue Model

Company DescriptionDenny's Corporation (DENN) is a prominent American diner-style restaurant chain known for its 24/7 service, offering a diverse menu that includes breakfast items, burgers, sandwiches, and desserts. Founded in 1953, Denny's operates primarily in the casual dining sector and has established itself as a go-to destination for family meals and late-night dining. The company's franchise model allows for a wide reach across the United States and internationally, with a focus on providing a welcoming atmosphere and value-oriented meals.
How the Company Makes MoneyDenny'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 Earnings Call Summary

Earnings Call Date:Aug 04, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 04, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted some positive developments such as the strong performance of Keke's Breakfast Cafe, improvements in off-premise sales, and a new loyalty program launch. However, these were offset by challenges including a decline in same-restaurant sales, increased product costs, and a volatile consumer environment.
Q2-2025 Updates
Positive Updates
Improved Off-Premise Sales
Off-premise sales contributed a 1.5% improvement in same-restaurant sales during Q2, attributed to investments in digital which increased website traffic, improved conversion rates, and more effective promotions on third-party platforms.
Positive Performance of Keke's Breakfast Cafe
Keke's delivered strong second quarter same-restaurant sales of positive 4%, significantly outperforming the BBI Family Dining Index in Florida by over 220 basis points.
Loyalty Program Launch
A new points-based loyalty program is set to launch in the back half of the year, expected to drive 50 to 100 basis points in traffic over time.
Company Margin Improvement Efforts
Margin improvement initiatives identified savings opportunities expected to deliver up to 200 basis points of savings over the next 12 to 18 months.
Negative Updates
Decline in System-Wide Same-Restaurant Sales
Denny's reported system-wide same-restaurant sales of negative 1.3%, with markets like Los Angeles, San Francisco, Houston, and Phoenix experiencing outsized macroeconomic pressures.
Increased Product Costs
Adjusted company restaurant operating margin decreased due to increased product costs of 80 basis points, with commodity prices holding steady at 5% during the quarter.
Volatile Consumer Environment
The consumer environment remains choppy with household incomes under pressure and volatile consumer sentiment, leading to selective spending.
Company Guidance
During the Denny's Corporation Second Quarter 2025 Earnings Conference Call, the company discussed a range of metrics and strategies aimed at navigating a challenging consumer environment. Despite facing a negative 1.3% in system-wide same-restaurant sales, Denny's saw a 170 basis point improvement from Q1. The company highlighted its focus on profitable traffic-driving initiatives, such as the buy-one-get-one Slam for $1 deal and the introduction of 4 Slams under $10, which collectively drove significant traffic and engaged new and lapsed users. Off-premise sales contributed positively, improving same-restaurant sales by 1.5% during the quarter, supported by digital investments and a new points-based loyalty program. Denny's closed underperforming restaurants, enhancing franchise health and increasing average unit volumes by 5%. Keke's Breakfast Cafe, Denny's growth brand, reported a strong 4% same-restaurant sales increase, driven by initiatives like alcohol offerings and off-premise sales, and expanded into new markets such as Nashville and Dallas. The guidance for full year 2025 was reiterated, with expectations for low-end same-restaurant sales growth driven by continued digital enhancements, remodels, and loyalty program launches. The company remains focused on strategic initiatives and cost savings to mitigate inflation pressures and boost margins.

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
65
Positive
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
40
Negative
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
55
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue454.00M452.33M463.92M456.43M398.17M288.61M
Gross Profit187.43M332.11M153.87M141.64M142.10M79.69M
EBITDA60.75M62.08M63.77M78.80M75.55M25.15M
Net Income17.21M21.57M19.95M74.71M78.07M-5.12M
Balance Sheet
Total Assets488.07M496.27M464.82M498.33M435.53M430.95M
Cash, Cash Equivalents and Short-Term Investments1.04M2.80M6.17M5.27M33.17M6.16M
Total Debt415.45M408.20M395.26M411.45M324.82M379.76M
Total Liabilities524.50M530.30M527.50M535.45M500.79M561.39M
Stockholders Equity-36.42M-34.02M-62.69M-37.12M-65.27M-130.45M
Cash Flow
Free Cash Flow1.52M918.00K62.15M27.61M68.82M-10.10M
Operating Cash Flow34.29M29.49M72.13M39.45M76.17M-3.14M
Investing Cash Flow-28.52M-26.67M-7.56M-86.60M29.01M4.65M
Financing Cash Flow-5.89M-6.01M-63.19M20.04M-78.45M-994.00K

Denny's Technical Analysis

Technical Analysis Sentiment
Positive
Last Price4.81
Price Trends
50DMA
4.14
Positive
100DMA
4.01
Positive
200DMA
4.72
Positive
Market Momentum
MACD
0.17
Negative
RSI
67.51
Neutral
STOCH
72.83
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 4.81 is above the 20-day moving average (MA) of 4.23, above the 50-day MA of 4.14, and above the 200-day MA of 4.72, indicating a bullish trend. The MACD of 0.17 indicates Negative momentum. The RSI at 67.51 is Neutral, neither overbought nor oversold. The STOCH value of 72.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DENN.

Denny's Risk Analysis

Denny's disclosed 21 risk factors in its most recent earnings report. Denny's reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Denny's Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
72
Outperform
$382.19M35.4819.65%-1.72%-70.31%
68
Neutral
$3.04B18.8041.01%1.77%4.77%38.24%
64
Neutral
$750.01M28.517.12%4.07%-1.24%
64
Neutral
$1.22B21.2412.90%1.92%2.84%-4.44%
61
Neutral
$17.96B13.14-5.29%3.00%1.25%-13.95%
60
Neutral
$247.71M15.59-63.40%0.06%-12.14%
41
Neutral
$32.04M-978.37%-1.23%-68.38%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DENN
Denny's
4.81
-1.23
-20.36%
BJRI
BJ's Restaurants
33.90
4.38
14.84%
CBRL
Cracker Barrel
52.17
15.57
42.54%
CAKE
Cheesecake Factory
61.08
24.38
66.43%
NDLS
Noodles & Co
0.69
-0.71
-50.71%
PBPB
Potbelly
12.63
5.08
67.28%

Denny's Corporate Events

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Denny’s Reports Q2 2025 Financial Results
Neutral
Aug 4, 2025

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.

Private Placements and FinancingBusiness Operations and Strategy
Denny’s Announces Debt Refinancing Plans
Positive
Jul 25, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025