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Stephens: Denny's Worth $12/Share Now

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Why There Could Be Upside To Current Expectations For Denny's Q3
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In a report published Tuesday, analysts at Stephens maintained their Equal-Weight rating on Denny's Corporation (NASDAQ: DENN), while raising the price target from $11 to $12. The company reported robust top and bottom line results for the quarter.

Same store sales were higher than the consensus by almost 300bps, while the EPS was above the estimates for the quarter. This reflected acceleration of 350bps for company-owned stores, as compared to 4Q14, which the analysts believe is the best performance by Denny's in more than a decade.

The same store sales growth was driven by increase in traffic as well as average check. Denny's strategy to attract its core customer base via daily value offerings and better service execution at its restaurants appears to be bearing fruit.

"We believe that Denny's has and will continue to effectively capture market share of the improving lower-end consumer as it highlights everyday value through its iconic and increasingly relevant brand," Stephens said.

The analysts expect the company to continue to outperform the industry, going forward, with a combination of Denny's marketing initiatives and key menu positioning the company for market share gains in the family dining segment.

Stephens has raised its same store sales growth and adjusted EPS estimates for the company for 2Q and FY15.

Latest Ratings for DENN

DateFirmActionFromTo
Apr 2016NomuraInitiates Coverage onNeutral
Jan 2016Stephens & Co.UpgradesEqual-WeightOverweight
Jan 2016Stephens & Co.UpgradesOverweight

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