Denny's (DENN) AI Stock Analysis

• Market Cap: $194.24M
• Dividend Yield: N/A
• Average Volume (3M): 1.11M
• Price to Earnings (P/E): 11.5
• Beta (1Y): 0.96
• Revenue Growth: -0.53%
• EPS Growth: -24.19%
• Country: US
• Employees: 3,800
• Sector: Consumer Cyclical
• Sector Strength: 72
• Industry: Restaurants
• EPS (TTM): 0.08
• Shares Outstanding: 51,251,064
• 10 Day Avg. Volume: 819,214
• 30 Day Avg. Volume: 1,108,731
• PEG Ratio: -0.70
• Price to Book (P/B): -6.42
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 150.98
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $6.81
• Price Target Upside: 79.68% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 60 Neutral
• Price Target: $4.00 ▲( 5.54% Upside)

Denny's overall stock score reflects a challenging operating environment with mixed financial performance and cautious optimism from recent earnings. The company's strategic initiatives and strong Q4 results provide some positive momentum. However, high leverage and macroeconomic pressures present ongoing risks. The stock is fairly valued with technical indicators suggesting moderate positive momentum, but potential for resistance remains.

Positive Factors

Customer Acquisition

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

Earnings Performance

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

Profit Margins

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

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 two main streams: company-operated restaurants and franchised restaurant operations. In company-operated locations, Denny's earns money directly through the sale of food and beverages to customers. For franchised restaurants, revenue is generated through initial franchise fees, ongoing royalty fees based on a percentage of sales, and other related fees. Denny's also benefits from partnerships with franchisees, enabling expansion with lower capital investment while receiving consistent revenue from franchise operations. Additionally, Denny's leverages its brand and marketing strategies to maintain customer loyalty and drive sales across all locations.

Denny's Financial Statement Overview

Summary

Denny's financial health presents a mixed picture. The company demonstrates good operational efficiency with solid gross margins and cash generation relative to net income, but it faces challenges with profitability and high leverage. Stagnant revenue growth and negative equity indicate potential risks that could impact long-term viability. Strengthening the balance sheet and improving net profitability should be priorities for sustainable 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
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
	EBIT
42.10M	45.32M	52.82M	113.20M	104.08M	10.85M
	EBITDA
61.11M	62.08M	63.77M	78.80M	75.55M	25.15M
	Net Income Common Stockholders
17.21M	21.57M	19.95M	74.71M	78.07M	-5.12M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
16.57M	2.80M	6.17M	5.27M	33.17M	6.16M
	Total Assets
422.93M	496.27M	464.82M	498.33M	435.53M	430.95M
	Total Debt
379.19M	408.20M	395.26M	411.45M	324.82M	379.76M
	Net Debt
364.68M	406.50M	390.37M	407.93M	294.20M	375.87M
	Total Liabilities
525.00M	530.30M	527.50M	535.45M	500.79M	561.39M
	Stockholders Equity
-102.07M	-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: Negative
• Last Price: 3.79
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DENN, the sentiment is Negative. The current price of 3.79 is below the 20-day moving average (MA) of 4.02, above the 50-day MA of 3.74, and below the 200-day MA of 5.51, indicating a neutral trend. The MACD of 0.06 indicates Positive momentum. The RSI at 45.69 is Neutral, neither overbought nor oversold. The STOCH value of 5.39 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DENN.

Denny's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAKE	73 Outperform	$2.59B	16.43	46.60%	2.06%	4.42%	48.23%
PBPB	73 Outperform	$299.91M	7.07	117.47%	―	-3.96%	1036.87%
BJRI	70 Neutral	$917.81M	44.20	6.01%	―	2.91%	-4.86%
CBRL	66 Neutral	$1.25B	34.91	7.80%	1.83%	2.26%	-56.99%
Sector *	62 Neutral	$6.88B	11.26	2.78%	3.93%	2.65%	-22.00%
DENN	60 Neutral	$194.24M	11.53	-63.40%	―	-0.53%	-24.19%
NDLS	41 Neutral	$38.64M	―	-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.