Denny's (DENN) Is Weak On High Volume Today

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.

Trade-Ideas LLC identified Denny's ( DENN) as a weak 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 $5.9 million.
  • DENN has traded 174,852 shares today.
  • DENN is trading at 3.33 times the normal volume for the stock at this time of day.
  • DENN is trading at a new low 3.04% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 full-service restaurants under the Denny's brand name. DENN has a PE ratio of 26. 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 636,900 shares per day over the past 30 days. Denny's has a market cap of $876.5 million and is part of the services sector and leisure industry. The stock has a beta of 0.69 and a short float of 2% with 3.11 days to cover. Shares are up 5.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Denny's as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 42.85% and other important driving factors, this stock has surged by 61.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • Net operating cash flow has decreased to $10.62 million or 20.31% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, DENNYS CORP has marginally lower results.
  • The debt-to-equity ratio is very high at 39.32 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.23, which clearly demonstrates the inability to cover short-term cash needs.

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