Denny's Corp (DENN)

sandvig (99.38) Submitted: 9/02/08 11:56 AM : Start Price: $2.82 DENN Score: -8.55

Ab ovo - From the egg.


I wrote a thumbs down pitch on DENN some time ago. At this price I think it presents enough opportunity to offset the risk of its high debt level.


On the upside- DENN generates more sales from the use of its assets than just about any restaurant. It generates positive cash flow. A relatively small portion of its long term debt is appraoching maturity. It sells for substantially below book value, and it may have real estate that has a market value above what appears on the books. Its management gets high ratings for honesty.


On the downside- rising food costs hurts the restaurant industry hard. I think high gas prices will hit DENN harder than most restaurants.


On balance- I think there's a chance for a grand slam!

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