Ahead Of The Bell: DineEquity Upgraded By Morgan

NEW YORK (AP) — An analyst upgraded shares of DineEquity Inc. on Tuesday and said the operator of Applebee's and IHOP restaurants may see its share price rise as management continues a turnaround plan.

Morgan Keegan analyst Destin M. Tompkins raised his rating to "Outperform" from "Market Perform" based on potential appreciation in the stock price as management executes its strategy. The stock has already more than doubled in value so far this year.

Tompkins said operating fundamentals are stabilizing, and improving credit markets may help franchising efforts.

"Management has proven its ability to turn around a mature brand with its success at IHOP, and Applebee's recent same-store sales trends have outperformed industry averages," Tompkins wrote in a client note.

In July, DineEquity said it swung to a second-quarter profit, but revenue in the period fell by nearly 18 percent to $349.7 million.

Sales at established stores declined 0.6 percent at IHOP and slipped 4.3 percent at Applebee's as consumers scaled back on dining out during the recession.

At that time, Glendale, Calif.-based DineEquity said it didn't think it would be able to franchise 200 Applebee's locations by the end of the year because of a lack of financing for would-be buyers.