Denny's (DENN) AI Stock Analysis

• Market Cap: $237.80M
• Dividend Yield: N/A
• Average Volume (3M): 568.00K
• Price to Earnings (P/E): 14.1
• Beta (1Y): 0.95
• Revenue Growth: -0.53%
• EPS Growth: -24.19%
• Country: US
• Employees: 3,800
• Sector: Consumer Cyclical
• Sector Strength: 71
• Industry: Restaurants
• EPS (TTM): 0.08
• Shares Outstanding: 51,251,064
• 10 Day Avg. Volume: 674,211
• 30 Day Avg. Volume: 567,998
• PEG Ratio: -0.60
• Price to Book (P/B): -5.55
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 129.81
• Enterprise Value/Market Cap: 2.57
• Enterprise Value/Revenue: 0.34
• Enterprise Value/Gross Profit: 3.26
• Enterprise Value/Ebitda: 2.32
• 1Y Price Target: $7.00
• Price Target Upside: 65.48% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 59 Neutral
• Price Target: $4.50 ▲(6.38%Upside)

Denny's overall score reflects a challenging financial position with high leverage and stagnant revenue growth, despite good operational efficiency and cash generation. Technical analysis indicates potential oversold conditions, while valuation metrics suggest the stock may be undervalued. Earnings call insights reveal mixed sentiment, combining successful promotions with pressures from declining sales and macroeconomic factors.

Positive Factors

Customer Growth

The value offerings, including promotions like Buy One Slam Get One for $1, attracted new and lapsed customers, expanding Denny's customer base.

Revenue Performance

Denny’s reported operating results that beat revenue consensus, indicating strong performance in the market.

Negative Factors

Profit Margins

Higher commodity costs and inefficiency costs from new units pressured Denny's profit margins.

Profitability Expectations

DENN reported 4Q24 profitability results that fell short of consensus expectations, with revenues below consensus and adjusted EPS falling short as well.

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 makes money primarily through the operation and franchising of its restaurants. The company's revenue model is built on two main streams: company-operated restaurants and franchised restaurants. Revenue from company-operated restaurants is generated directly from sales of food and beverages to customers. In contrast, franchised restaurants contribute to revenue through franchise fees, which include initial franchise fees, royalties based on a percentage of sales, and other related income. Denny's also benefits from strategic partnerships and marketing initiatives that enhance brand visibility and drive traffic to its locations, thereby increasing sales. The combination of company-owned and franchised locations allows Denny's to expand its footprint while managing operational costs effectively.

Denny's Financial Statement Overview

Summary

Denny's financial performance shows operational efficiency with a solid gross profit margin and strong operational cash flow. However, it faces challenges with negative equity and high leverage, indicating financial instability. The stagnant revenue growth and modest profitability are areas of concern, impacting the overall financial health.

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

Denny's Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4.23
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• 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 4.23 is above the 20-day moving average (MA) of 4.20, above the 50-day MA of 4.12, and below the 200-day MA of 5.07, indicating a neutral trend. The MACD of 0.01 indicates Negative momentum. The RSI at 51.87 is Neutral, neither overbought nor oversold. The STOCH value of 67.26 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
PBPB	75 Outperform	$381.38M	8.99	117.47%	―	-3.96%	1036.87%
CAKE	74 Outperform	$3.39B	21.51	46.60%	1.58%	4.42%	48.23%
CBRL	71 Outperform	$1.49B	27.89	12.90%	1.50%	2.84%	-4.44%
BJRI	66 Neutral	$899.89M	43.33	6.01%	―	2.91%	-4.86%
Sector *	63 Neutral	$17.10B	10.79	-8.01%	2.94%	1.62%	-25.73%
DENN	59 Neutral	$237.80M	14.12	-63.40%	―	-0.53%	-24.19%
NDLS	40 Underperform	$47.78M	―	-978.37%	―	-0.61%	-200.32%

Denny's Corporate Events

Denny’s Stockholders Approve Omnibus Incentive Plan

At the Annual Meeting of Stockholders on May 14, 2025, Denny’s Corporation’s stockholders approved the Amended and Restated 2021 Omnibus Incentive Plan, which was previously adopted by the Board of Directors. Additionally, the meeting saw the election of seven directors, ratification of KPMG LLP as the independent auditor for 2025, approval of executive compensation, and rejection of a proposal to allow shareholders with at least 15% of stock to call special meetings.

The most recent analyst rating on (DENN) stock is a Buy with a $7.00 price target. To see the full list of analyst forecasts on Denny’s stock, see the DENN Stock Forecast page.

Denny’s Reports Q1 2025 Results Amid Challenges

Denny’s Corporation reported its first-quarter 2025 results, highlighting challenges due to macroeconomic conditions. The company saw a slight increase in total operating revenue to $111.6 million, despite a decline in Denny’s same-restaurant sales by 3.0%. Keke’s, however, showed growth with a 3.9% increase in sales and expansion into Georgia. Operating income fell to $5.2 million from $10.0 million the previous year, with net income at $0.3 million. The company invested in new cafes and remodels, and despite the challenges, remains committed to strategic initiatives and expanding its market presence.