Del Frisco’s Restaurant Group (DFRG) & Denny’s Corporation (DENN) Financial Review

Denny’s Corporation (NASDAQ: DENN) and Del Frisco’s Restaurant Group (NASDAQ:DFRG) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.

Earnings and Valuation

This table compares Denny’s Corporation and Del Frisco’s Restaurant Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Denny’s Corporation $519.28 million 1.57 $91.98 million $0.52 23.31
Del Frisco’s Restaurant Group $356.76 million 0.86 $41.74 million $0.56 25.89

Denny’s Corporation has higher revenue and earnings than Del Frisco’s Restaurant Group. Denny’s Corporation is trading at a lower price-to-earnings ratio than Del Frisco’s Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Denny’s Corporation and Del Frisco’s Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Denny’s Corporation 7.34% -60.77% 13.43%
Del Frisco’s Restaurant Group 3.73% 7.39% 4.77%

Insider & Institutional Ownership

92.6% of Denny’s Corporation shares are owned by institutional investors. 5.2% of Denny’s Corporation shares are owned by insiders. Comparatively, 2.4% of Del Frisco’s Restaurant Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Denny’s Corporation and Del Frisco’s Restaurant Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Denny’s Corporation 0 2 1 0 2.33
Del Frisco’s Restaurant Group 0 3 2 0 2.40

Denny’s Corporation currently has a consensus target price of $12.67, indicating a potential upside of 4.51%. Del Frisco’s Restaurant Group has a consensus target price of $18.75, indicating a potential upside of 29.31%. Given Del Frisco’s Restaurant Group’s stronger consensus rating and higher possible upside, analysts clearly believe Del Frisco’s Restaurant Group is more favorable than Denny’s Corporation.

Volatility & Risk

Denny’s Corporation has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, Del Frisco’s Restaurant Group has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.

Summary

Denny’s Corporation beats Del Frisco’s Restaurant Group on 8 of the 14 factors compared between the two stocks.

About Denny’s Corporation

Denny’s Corporation (Denny’s) operates a franchised full-service restaurant chain. The Company, through its subsidiary, Denny’s, Inc., owns and operates the Denny’s brand. As of December 28, 2016, the Denny’s brand consisted of 1,733 franchised, licensed and Company-operated restaurants around the world, including 1,610 restaurants in the United States and 123 international locations. As of December 28, 2016, 1,564 of its restaurants were franchised or licensed and 169 were Company-operated. In addition to its breakfast-all-day items, Denny’s offers a selection of lunch and dinner items, including burgers, sandwiches, salads and skillet entrees, along with an assortment of beverages, appetizers and desserts. The Company’s Fit Fare menu helps its guests identify items suited to their dietary needs. Most Denny’s restaurants offer special items for children and seniors. The Company has restaurant locations within travel centers, primarily with Pilot and Pilot Flying J Travel Centers.

About Del Frisco’s Restaurant Group

Del Frisco’s Restaurant Group, Inc. develops, owns and operates three contemporary, complementary restaurants: Del Frisco’s Double Eagle Steak House (Del Frisco’s), Sullivan’s Steakhouse (Sullivan’s) and Del Frisco’s Grille (the Grille). As of December 27, 2016, the Company operated 53 restaurants in 24 states and the District of Columbia in the United States. The Company’s segments include Del Frisco’s, Sullivan’s and the Grille. Del Frisco’s is a steakhouse concept in the United States. The Del Frisco’s brand’s menu includes the United States Department of Agriculture (USDA) Prime grade, wet-aged steaks hand-cut at the time of order and a range of other offerings, including prime lamb, fresh seafood, and signature side dishes and desserts. Each restaurant has a sommelier to guide diners through a wine list. As of December 27, 2016, the Company operated 12 Del Frisco’s steakhouses in nine states and the District of Columbia. Sullivan’s is a complementary concept to Del Frisco’s.

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