Denny's (DENN) AI Stock Analysis

• Market Cap: $271.40M
• Dividend Yield: N/A
• Average Volume (3M): 823.05K
• Price to Earnings (P/E): 17.1
• Beta (1Y): 0.98
• Revenue Growth: 0.06%
• EPS Growth: -12.14%
• Country: US
• Employees: 3,800
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.09
• Shares Outstanding: 51,498,993
• 10 Day Avg. Volume: 671,641
• 30 Day Avg. Volume: 823,055
• PEG Ratio: 1.03
• Price to Book (P/B): -9.06
• Price to Sales (P/S): 0.68
• P/FCF Ratio: 335.70
• Enterprise Value/Market Cap: 2.32
• Enterprise Value/Revenue: 1.38
• Enterprise Value/Gross Profit: 3.27
• Enterprise Value/Ebitda: 10.59
• 1Y Price Target: $5.50
• Price Target Upside: 4.36% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 57 Neutral
• Price Target: $5.50 ▲(4.36% Upside)

Denny's overall stock score reflects significant financial challenges, including high leverage and cash flow issues, which are partially offset by positive technical indicators and strategic initiatives highlighted in the earnings call. The moderate valuation suggests a balanced risk-reward profile.

Positive Factors

Revenue Growth

Denny's positive revenue growth suggests a recovery trend, indicating effective strategies in attracting customers and expanding market reach.

Off-Premise Sales

The growth in off-premise sales reflects successful digital investments and adaptation to consumer preferences, enhancing long-term revenue streams.

Loyalty Program Launch

The new loyalty program aims to increase customer retention and engagement, potentially boosting long-term sales and customer loyalty.

Negative Factors

High Leverage

High leverage and negative equity suggest financial instability, which could limit growth opportunities and increase risk during economic downturns.

Decline in Profit Margins

The decline in profit margins indicates pressure on operational efficiency, which could affect profitability and cash flow if not addressed.

Volatile Consumer Environment

A volatile consumer environment poses risks to revenue stability, as economic pressures may lead to reduced discretionary spending on dining out.

Denny's Business Overview & Revenue Model

Company Description

Denny's Corporation, through its subsidiary, Denny's, Inc., owns and operates full-service restaurant chains under the Denny's brand. As of December 29, 2021, it had 1,640 franchised, licensed, and company restaurants worldwide. The company was formerly known as Advantica Restaurant Group, Inc. and changed its name to Denny's Corporation in 2002. Denny's Corporation was founded in 1953 and is based in Spartanburg, South Carolina.

How the Company Makes Money

Denny's generates revenue primarily through its company-owned restaurants and franchise operations. The revenue model includes sales from food and beverages sold at its locations, which are complemented by a robust takeout and delivery service. Franchise fees and ongoing royalties from franchised locations also contribute significantly to Denny's earnings. Key revenue streams include in-store dining, takeout services, and catering options, with a focus on high-margin items on their menu. Additionally, strategic partnerships with delivery platforms expand their customer base and drive sales, particularly in urban areas where convenience is paramount.

Denny's Financial Statement Overview

Summary

Denny's financial performance is challenged by high leverage, negative equity, and declining profitability margins, despite positive revenue growth. Cash flow issues further highlight financial instability.

Income Statement

Denny's shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) gross profit margin is moderate at 42.2%, but there's a significant decline from the previous year's 73.4%. The net profit margin has also decreased to 3.5% from 4.8% in the prior year. Revenue growth is positive at 38.1% TTM, indicating a recovery trend. However, EBIT and EBITDA margins have slightly decreased, reflecting pressure on operational efficiency.

Balance Sheet

The balance sheet reveals high leverage with a negative stockholders' equity, resulting in an unfavorable debt-to-equity ratio of -12.07 TTM. Return on equity is negative, indicating losses relative to equity. The equity ratio is also negative, suggesting potential financial instability. Despite these challenges, total assets have remained relatively stable.

Cash Flow

Cash flow analysis highlights significant challenges. The TTM free cash flow is negative, with a substantial decline in free cash flow growth. The operating cash flow to net income ratio is below 1, indicating limited cash generation relative to net income. The free cash flow to net income ratio is low, reflecting constrained cash flow conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	455.73M	452.33M	463.92M	456.43M	398.17M	288.61M
Gross Profit	192.34M	332.11M	153.87M	141.64M	142.10M	79.69M
EBITDA	59.38M	62.08M	63.77M	126.43M	130.53M	23.16M
Net Income	16.11M	21.57M	19.95M	74.71M	78.07M	-5.12M
Balance Sheet
Total Assets	491.15M	496.27M	464.82M	498.33M	435.53M	430.95M
Cash, Cash Equivalents and Short-Term Investments	1.17M	2.80M	6.17M	5.27M	33.17M	6.16M
Total Debt	417.42M	408.20M	395.26M	411.45M	324.82M	379.76M
Total Liabilities	525.73M	530.30M	527.50M	535.45M	500.79M	561.39M
Stockholders Equity	-34.58M	-34.02M	-62.69M	-37.12M	-65.27M	-130.45M
Cash Flow
Free Cash Flow	-5.55M	918.00K	62.15M	27.61M	68.82M	-10.10M
Operating Cash Flow	29.46M	29.49M	72.13M	39.45M	76.17M	-3.14M
Investing Cash Flow	-33.86M	-26.67M	-7.56M	-86.60M	29.01M	4.65M
Financing Cash Flow	4.40M	-6.01M	-63.19M	20.04M	-78.45M	-994.00K

Denny's Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.27
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DENN, the sentiment is Positive. The current price of 5.27 is above the 20-day moving average (MA) of 5.21, above the 50-day MA of 4.55, and above the 200-day MA of 4.60, indicating a bullish trend. The MACD of 0.19 indicates Positive momentum. The RSI at 57.38 is Neutral, neither overbought nor oversold. The STOCH value of 35.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DENN.

Denny's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LOCO	70 Outperform	$282.56M	11.19	9.46%	―	1.85%	-0.99%
DIN	69 Neutral	$431.39M	9.37	-42.81%	7.27%	2.92%	-49.77%
RICK	63 Neutral	$271.99M	16.73	6.12%	0.90%	-5.34%	256.61%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
DENN	57 Neutral	$271.40M	17.08	-63.40%	―	0.06%	-12.14%
JACK	51 Neutral	$376.52M	―	4.15%	8.83%	-6.66%	-71.87%
RRGB	51 Neutral	$127.52M	―	92.02%	―	-3.09%	-30.16%

Denny's Corporate Events

Denny’s Reports Q2 2025 Financial Results

On August 4, 2025, Denny’s Corporation reported its second-quarter 2025 results, highlighting a total operating revenue of $117.7 million and a net income of $2.5 million. The company focused on strategic initiatives such as innovating Denny’s value platform and expanding Keke’s portfolio by 7% year-to-date. Despite challenges, Denny’s achieved a 3.5% reduction in corporate administrative expenses and refranchised three Keke’s cafes. The company aims to continue delivering shareholder value through balanced investments and share repurchases.

Denny’s Announces Debt Refinancing Plans

Denny’s Corporation has announced plans to undertake refinancing transactions aimed at addressing nearly all of its existing debt, which is due by August 26, 2026. This move is expected to impact the company’s financial structure and potentially improve its market positioning by alleviating debt-related pressures.