Denny's Corp (NASDAQ:DENN)

CAPS Rating: 4 out of 5

The Company is America's family-style restaurant chain in terms of market share and number of units. Through its wholly owned subsidiaries, Denny's Holdings, Inc. and Denny's, Inc., it owns and operates the restaurant brand.


Player Avatar alexwong0708 (< 20) Submitted: 4/1/2009 12:18:50 PM : Underperform Start Price: $2.19 DENN Score: -196.51

Denny's apparently has been going through a turnaround for the past 10 years. If any of you follows football, you might hear of the Lions "rebuilding since 1958." I do not mean to rub this on Denny's face, but its record is dismal.

I have not seriously investigate the company yet, but by looking at the data and ratio on msn money I am convinced to not invest in this stock in the near future.

The company has had negative equity for the past 10 years. Therefore, it has to make up the difference in cash by debt financing. As a result, the company has a negative book value. The company also has an inconsistent record on net income,. Net Income Margin hovers around -4% - 2%. Price to sales looks decent, but the company just isn't making money at all.

On a more macro level, the company is in a sector that is hard hit in this recession. More contraction will take place before there is a turnaround. Denny's also doesn't have a competitive advantage against its competitors. Consumers can always switch to McDonald's or... well.. Kelloggs or Kraft (aka eating at home). Denny's has to do better in cost cutting in this downturn.

Featured Broker Partners