Head-To-Head Contrast: Denny’s Corporation (DENN) & DineEquity (NYSE:DIN)

DineEquity (NYSE: DIN) and Denny’s Corporation (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Institutional and Insider Ownership

92.0% of DineEquity shares are owned by institutional investors. Comparatively, 92.4% of Denny’s Corporation shares are owned by institutional investors. 2.2% of DineEquity shares are owned by company insiders. Comparatively, 5.2% of Denny’s Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

DineEquity has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500. Comparatively, Denny’s Corporation has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Dividends

DineEquity pays an annual dividend of $3.88 per share and has a dividend yield of 8.0%. Denny’s Corporation does not pay a dividend. DineEquity pays out 86.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DineEquity has raised its dividend for 2 consecutive years.

Profitability

This table compares DineEquity and Denny’s Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DineEquity 13.02% 38.34% 4.35%
Denny’s Corporation 7.34% -60.77% 13.43%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for DineEquity and Denny’s Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DineEquity 0 4 3 0 2.43
Denny’s Corporation 0 2 1 0 2.33

DineEquity currently has a consensus target price of $57.00, indicating a potential upside of 17.79%. Denny’s Corporation has a consensus target price of $12.67, indicating a potential downside of 2.56%. Given DineEquity’s stronger consensus rating and higher possible upside, research analysts plainly believe DineEquity is more favorable than Denny’s Corporation.

Earnings and Valuation

This table compares DineEquity and Denny’s Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DineEquity $621.56 million 1.40 $234.57 million $4.48 10.80
Denny’s Corporation $519.28 million 1.68 $91.98 million $0.52 25.00

DineEquity has higher revenue and earnings than Denny’s Corporation. DineEquity is trading at a lower price-to-earnings ratio than Denny’s Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

DineEquity beats Denny’s Corporation on 10 of the 17 factors compared between the two stocks.

About DineEquity

DineEquity, Inc., through its subsidiaries, owns and franchises the Applebee’s Neighborhood Grill & Bar (Applebee’s) concept in the bar and grill segment within the casual dining category of the restaurant industry, and owns, franchises and operates the International House of Pancakes (IHOP) concept in the family dining category of the restaurant industry. It operates through four segments: Franchise operations, Rental operations, Company restaurant operations and Financing operations. As of December 31, 2016, it had 3,749 restaurants. Applebee’s menu features a selection of grill and bar fare, such as appetizers, bar snacks, burgers, classic entrees and lighter fare, as well as cocktails, beers and desserts. As of December 31, 2016, IHOP franchise and area license restaurants were located in all 50 states within the United States, in the District of Columbia, in three United States territories and in 10 countries outside of the United States.

About Denny’s Corporation

Denny’s Corporation (Denny’s) operates a franchised full-service restaurant chain. The Company, through its subsidiary, Denny’s, Inc., owns and operates the Denny’s brand. As of December 28, 2016, the Denny’s brand consisted of 1,733 franchised, licensed and Company-operated restaurants around the world, including 1,610 restaurants in the United States and 123 international locations. As of December 28, 2016, 1,564 of its restaurants were franchised or licensed and 169 were Company-operated. In addition to its breakfast-all-day items, Denny’s offers a selection of lunch and dinner items, including burgers, sandwiches, salads and skillet entrees, along with an assortment of beverages, appetizers and desserts. The Company’s Fit Fare menu helps its guests identify items suited to their dietary needs. Most Denny’s restaurants offer special items for children and seniors. The Company has restaurant locations within travel centers, primarily with Pilot and Pilot Flying J Travel Centers.

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