Denny's Corp (NASDAQ:DENN)
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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.
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First what I don't like – Free Cash Flow / Operating Cash Flow are not greater than Net Income. I like to see cash flows stronger than NI. It makes me feel more comfortable that there are no shenanigans going on in regards to reported earnings. There are, however, strong owner earnings with this company, and it appears to be well managed in the last couple of years (low flow ratio, high ROIC). The main characteristic of this company that is appealing right now is that it is dirt cheap. Even with very conservative earnings growth estimates (say 3% per year average for next 5 years), we are still below intrinsic value of this stock. Analysts are expecting 19% on average per year. I don't think that's going to happen; however, it does give us starting point for estimation. Let’s see where this goes.