Strong On High Relative Volume: Denny's (DENN)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Denny's ( DENN) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Denny's as such a stock due to the following factors:

  • DENN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.5 million.
  • DENN has traded 116,168 shares today.
  • DENN is trading at 4.20 times the normal volume for the stock at this time of day.
  • DENN is trading at a new high 3.10% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on DENN:

Denny's Corporation, through its subsidiary, Denny's, Inc., owns and operates restaurants under the Denny's brand name in United States and internationally. DENN has a PE ratio of 33.0. Currently there are 2 analysts that rate Denny's a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Denny's has been 678,800 shares per day over the past 30 days. Denny's has a market cap of $810.8 million and is part of the services sector and leisure industry. The stock has a beta of 0.54 and a short float of 2.4% with 3.41 days to cover. Shares are up 33.1% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Denny's as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.60% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DENN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DENNYS CORP has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, DENNYS CORP increased its bottom line by earning $0.27 versus $0.24 in the prior year. This year, the market expects an improvement in earnings ($0.37 versus $0.27).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Hotels, Restaurants & Leisure industry average. The net income increased by 18.7% when compared to the same quarter one year prior, going from $7.03 million to $8.34 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.5%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, DENNYS CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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