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Denny's - AI Stock Analysis

Analysis generated March 7, 2025

Denny's Corporation, popularly known as Denny's, is a leading American table service diner-style restaurant chain. Founded in 1953, Denny's has become a staple in the casual dining sector, offering a variety of comfort foods and all-day breakfast options. The company operates through a combination of company-owned and franchised locations across the United States and several other countries.

Fundamental Analysis

Revenue:
Denny's reported revenue of $130 million for the last quarter. This represents a 10.25% increase quarter-over-quarter, and an 11.63% increase year-over-year. The consistent revenue growth indicates that the company is successful in attracting more customers and potentially increasing prices.

Net Income:
Net income for the last quarter was $6.8 million, up 4.30% from the previous quarter. However, this is down 14.06% compared to the same quarter last year. The year-over-year decrease in net income might be due to increased operating costs or other financial disturbances that need further investigation.

EBITDA:
The EBITDA for the last quarter was $210,000, showing a decrease of 101.64% from the previous quarter and a decrease of 101.47% year-over-year. The drastic decline in EBITDA highlights an urgent need to scrutinize operational efficiencies and spending patterns.

P/E Ratio:
With a current P/E ratio of 11.15, Denny's is trading at a multiple that could be considered low, potentially indicating that the stock is undervalued. For value-focused investors, this might present an attractive buying opportunity, assuming further financial and operational metrics are promising.

Technical Analysis

Stock Price:
Denny's current stock price is $4.19. This represents a decrease of 40.48% compared to a month ago and a 55.04% decrease compared to a year ago. The significant drop in stock price indicates a bearish market sentiment and may raise concerns about the company's short-term viability.

Trend:
The trend is bearish. The current SMA10 is 4.66, which is lower than the previous SMA10 of 4.77. This negative trend suggests a continued downward trajectory, potentially signaling poor investor sentiment and a lack of short-term buying pressure.

RSI:
The RSI is 25, indicating that the stock is in an oversold condition. An RSI below 30 often presents a potential buying opportunity for investors looking for a bounce. However, caution should be exercised as technical indicators should be cross-referenced with other data points.

Alternative Data Analysis

Employee Sentiment and Job Postings:
Denny's currently has 4,000 open positions, a decrease of 43% in the last couple of months. This reduction may indicate cost-cutting measures, which could be a concern for long-term growth. Employee sentiment is also low with only 41% of employees having a positive outlook on the company, signaling potential internal dissatisfaction.

Customer Acquisition:
Denny's website attracts approximately 2.4 million visitors monthly, down by 20% in recent months. Similarly, app downloads are at 1,000 users per day, also down by 17% in the last couple of months. These trends suggest a decline in customer interest, which may negatively impact future revenues.

Customer Engagement:
Denny's maintains a notable social media presence with 280,000 Instagram followers and 400,000 Twitter followers. However, these numbers have either stagnated or slightly declined, indicating waning customer engagement. Given the importance of social media in brand visibility, this is a concerning trend.

AI Score:
The AltIndex’s AI score for Denny's is 30, which strongly suggests a sell signal, reflecting the cumulative negative indicators from both traditional and alternative data perspectives.

Conclusion

In summary, Denny's shows mixed signals with substantial revenue growth but concerning trends in net income, EBITDA, and technical indicators. The bearish stock trend, declining customer and employee engagement, and a strong sell AI score also raise red flags. Given these diverse indicators, cautious investors may want to conduct further due diligence before making any investment decisions. The current valuation may present an opportunity for value investors, but the existing risks should not be overlooked.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.