Rating Change #6
has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including deteriorating net income, poor profit margins and feeble growth in the company's earnings per share.
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Highlights from the ratings report include:
- Compared to its closing price of one year ago, DENN's share price has jumped by 31.42%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- DENN, with its decline in revenue, slightly underperformed the industry average of 2.9%. Since the same quarter one year prior, revenues fell by 10.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- DENNYS CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, DENNYS CORP reported lower earnings of $0.24 versus $1.14 in the prior year. This year, the market expects an improvement in earnings ($0.33 versus $0.24).
- The gross profit margin for DENNYS CORP is currently lower than what is desirable, coming in at 28.80%. Regardless of DENN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DENN's net profit margin of 5.58% is significantly lower than the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 93.0% when compared to the same quarter one year ago, falling from $92.05 million to $6.48 million.
Denny's Corporation, through its subsidiaries, engages in the ownership and operation of a chain of family-style restaurants. The company operates traditional American-style food restaurants under the Denny's brand name. The company has a P/E ratio of 24.4, above the S&P 500 P/E ratio of 17.7. Denny's has a market cap of $526.8 million and is part of the services sector and leisure industry. Shares are up 15.2% year to date as of the close of trading on Friday.
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