On Monday, Citi reaffirmed its positive stance on Denny's (NASDAQ:DENN) Corporation (NASDAQ:DENN) shares, maintaining a Buy rating and a price target of $7.50. Currently trading at $5.61, the stock appears undervalued according to InvestingPro analysis, with analyst targets ranging from $6 to $10.
The optimism follows Denny's recent performance, which surpassed analyst expectations. The company reported a fourth-quarter system-wide same-store sales (SSS) increase of 1.1%, which contrasts with Citi's projection of a 0.5% decline and the consensus estimate of a 0.3% rise.
The total count of Denny's stores, however, fell short of forecasts due to a higher number of net closures. According to the analyst's remarks, this reduction in store count appeared to be an acceleration of previously announced closures rather than a new trend.
InvestingPro data shows revenue declined 3.49% over the last twelve months, though the company maintains a healthy gross profit margin of 38.7%. The analyst anticipates that the forthcoming results and discussions at the ICR Conference will provide further clarity on whether Denny's comparable growth was driven by internal initiatives or a general increase in category spending.
Furthermore, the analyst suggests that the upcoming days could see changes in Denny's share performance based on a better understanding of the company's exposure and risk related to the California wildfires. This factor, alongside the general industry performance, is expected to have a significant influence on investor sentiment.
Denny's Corporation's recent SSS growth indicates resilience in its operational strategy, even as the company navigates challenges, including a reduction in store count. The company's performance, particularly in comparison to industry expectations, will be closely monitored by investors as they assess the impact of external factors such as the California wildfires and broader market trends as revealed at the ICR Conference. For deeper insights into Denny's financial health and detailed analysis, investors can access comprehensive research reports and additional ProTips through InvestingPro.
In other recent news, Denny's Corporation has been at the center of several significant developments. Truist Securities reaffirmed a Buy rating on Denny's shares, citing confidence in the company's future prospects. However, the firm reduced its price target to $8, following the company's Q3 2024 performance and Investor Day. Despite this, Denny's continues to implement strategic initiatives like enhancing its value offerings, launching virtual brands, and introducing a new loyalty program.
Benchmark also maintained a Buy rating but lowered the stock price target to $10, following Denny's Q3 earnings report and the company's announcement to close 150 lower-performing locations by the end of 2025. On the other hand, 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 clear growth strategies.
In terms of financial performance, Denny's reported Q2 2024 earnings with total operating revenue reaching $115.9 million. The company also revealed plans for the expansion of its virtual brand, Banda Burrito, and the opening of new restaurants. As part of a broader leadership shift, Denny's appointed Christopher D. Bode as the new President and Chief Operating Officer, with Kelli F. Valade continuing her role as CEO. These are some of the recent developments at Denny's Corporation.
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