Denny's Falls As Analyst Downgrades On Stock Price

NEW YORK (AP) — Shares of Denny's Corp. slid Wednesday as an analyst downgraded the restaurant chain on its stock price.

Earlier in the day the company known for its Grand Slam breakfasts reported its first-quarter profit climbed even though sales dropped on a consumer spending pullback.

Denny's 4 cents-per-share profit missed the 5 cents-per-share estimate of analysts surveyed by Thomson Reuters. Analysts' estimates generally exclude one-time items.

Mark Smith of Feltl & Co. was encouraged by the Spartanburg, S.C.-based company's better-than-expected same-store sales results, which inched up 0.3 percent in the quarter.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.

"Although we are encouraged by the strong first-quarter results, we think the shares are fully valued," Smith wrote in a client note. He cut Denny's rating to "Hold" from "Buy" and reiterated a $3 price target.

Denny's stock dropped 40 cents, or 13.3 percent, to $2.61 in midday trading. Over the past year, the shares have traded in a range of $1.15 to $4.10.