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On Tuesday, Truist Securities revised its price target for Denny's (NASDAQ:DENN) Corporation (NASDAQ:DENN), reducing it from $11.00 to $10.00 while keeping a Buy rating on the stock. The financial services firm made adjustments based on its analysis of the restaurant chain's projected second-quarter sales and earnings before interest, taxes, depreciation, and amortization (EBITDA).
According to Truist's card data, Denny's second-quarter 2024 sales are estimated at $758 million, which is slightly below the consensus. The same-store sales (SSS) growth is expected to be around 0.9%, which is a modest downtick from earlier estimates. The initial SSS growth forecast was 1.0%, but it has been revised to 0.4%.
The revised sales forecast comes after Denny's experienced a deceleration in year-over-year growth in June, despite ongoing promotions of its 'All Day Diner Deals' value menu. This slowdown occurred even after a period of acceleration in the previous months of April and May.
Looking ahead, Truist anticipates a potential increase in same-store sales in the second half of 2024, citing easier year-over-year comparisons as a reason for confidence in a slight rebound. Despite this outlook, the firm has lowered its second-quarter adjusted EBITDA estimate for Denny's to $23.0 million from the previous forecast of $23.3 million. This figure falls short of the consensus estimate of $23.5 million.
The adjustment in the price target to $10 reflects the updated estimates and expectations for Denny's financial performance. Truist's continued Buy rating indicates the firm's positive view on the future prospects of the company's stock.
In other recent news, Denny's Corporation has made notable strides amid industry challenges. The company reported a minor dip of 1.3% in Q1 domestic system-wide same restaurant sales, although it outperformed the family and casual dining segments.
Denny's highlighted strong off-premise sales, constituting 21% of total sales, and plans to continue innovating in this area. They also announced a remodel package to stimulate traffic and a positive reception of their Keke's Breakfast Cafe brand in the Nashville market.
Furthermore, Denny's has appointed Mark Vondrasek to its Board of Directors. Vondrasek, currently the Chief Commercial Officer at Hyatt, brings over 20 years of hospitality industry experience and a decade in financial services. His addition is expected to provide valuable insights into guest experience enhancement and brand development for Denny's and its recently acquired Keke's brand.
These recent developments are part of Denny's ongoing efforts to strengthen its leadership and position in the market. The company operates 1,614 restaurants, with the majority being franchised or licensed. Denny's continues to focus on menu innovation, value offerings, and technological advancements, setting the stage for potential growth in the coming quarters.
InvestingPro Insights
In light of Truist Securities' revised price target and analysis of Denny's Corporation, recent data from InvestingPro can further contextualize the company's financial landscape. Denny's current market capitalization stands at $342.8 million, with a P/E ratio of 15.16, reflecting the market's valuation of its earnings. Notably, the company's adjusted P/E ratio for the last twelve months as of Q1 2024 is lower at 10.03, suggesting a more attractive valuation in recent times.
InvestingPro Tips indicate that management has been aggressively buying back shares and the company has a high shareholder yield, which can be appealing to investors looking for active capital management strategies. Additionally, while the stock price has experienced significant volatility and is trading near its 52-week low, analysts predict the company will be profitable this year, with profitability already demonstrated over the last twelve months.
For readers interested in a deeper analysis, InvestingPro offers additional tips that could further inform investment decisions. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription to access these valuable insights.
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