On Monday, Truist Securities reaffirmed its positive stance on shares of Denny's (NASDAQ:DENN) Corporation (NASDAQ:DENN), maintaining a Buy rating and an $8.00 price target. The stock, currently trading at $6.27, has experienced a challenging year with a 42.37% decline year-to-date. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics, aligning with Truist's optimistic outlook.
Following discussions at the GLLR Summit with Denny's executives, including CEO Kelli Valade and CFO Robert Verostek, Truist Securities expressed increased confidence in the company's prospects.
InvestingPro data reveals that management has been actively buying back shares, demonstrating confidence in the company's future despite recent earnings forecast downgrades by analysts. Get access to 6 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.
The analyst highlighted four key areas where Denny's is expected to show progress: improving same-store sales (SSS) in 2025 due to macroeconomic and company-specific factors, robust unit growth at Keke's Cafe with recent franchisee openings in California, Colorado, and Texas, an acceleration of Keke's SSS in 2025 driven by marketing initiatives, alcohol offerings, and store remodels, and optimizing the Denny's system through accelerated closures and franchisee-to-franchisee transfers.
The firm's decision to uphold its estimates and price target, which is based on an 8x EV/EBITDA multiple, stems from these anticipated developments. The analyst noted that the $8 price target could potentially be a conservative estimate given the company's strategic initiatives aimed at bolstering performance.
Denny's Corporation's strategy involves a combination of accelerating same-store sales and expanding its footprint, particularly through the growth of Keke's Cafe, a breakfast and lunch concept. The recent franchisee openings are seen as a positive indicator of the brand's expansion and market reception.
Moreover, the company's focus on accelerating Keke's SSS through various tactics, including the introduction of alcohol and remodeling of stores, is expected to contribute to the brand's growth in the coming years.
With a beta of 2.02 and current P/E ratio of 18.95, investors should note the stock's higher volatility compared to the market. For detailed financial analysis and expert insights on Denny's and 1,400+ other stocks, consider accessing the comprehensive Pro Research Report available on InvestingPro.
Truist Securities also pointed to Denny's system optimization efforts, which involve store closures and the transfer of franchises to more capable hands, as a move that will strengthen the company's overall position. These strategies are part of Denny's broader efforts to improve its operational efficiency and market presence.
In other recent news, Denny's Corporation reported Q2 2024 earnings with total operating revenue reaching $115.9 million. Despite the slight decline in same-restaurant sales, the company continues to expand its virtual brand, Banda Burrito, and plans to open new restaurants.
Denny's has also implemented several initiatives to mitigate challenging economic conditions, such as enhancing its value offerings, launching virtual brands, introducing a new loyalty program, and remodeling stores.
Benchmark, and Citi have both provided their perspectives on Denny's. Benchmark lowered the stock price target to $10.00 but maintained a Buy rating. Citi upgraded Denny's shares from Neutral to Buy, setting a new price target of $7.50, and highlighted the company's disciplined spending and growth plans.
In terms of leadership changes, Denny's appointed Christopher D. Bode as the new President and Chief Operating Officer, with Kelli F. Valade continuing her role as CEO. This restructuring is part of the company's broader leadership shift. These are some of the recent developments at Denny's Corporation.
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