Denny's (DENN) Stock Forecast & Price Target

Denny's Corp displays a positive outlook as it has recently experienced improving sales trends, particularly in light of previously choppy same-store sales for the industry. The company benefits from a highly franchised operational model, which provides a resilient revenue stream from both food and beverage sales as well as franchise-related earnings, despite some challenges in stabilizing its operating model. Additionally, the growth potential of the Keke's Breakfast Cafe brand presents a significant opportunity for expansion and revenue diversification in the competitive restaurant sector.

Denny's Corp has reaffirmed its fiscal year 2025 same-store sales (SSS) guidance to range between a decline of 2.0% and an increase of 1%, with management indicating expectations toward the lower end, suggesting a challenging operating environment for the family dining segment. The company's second quarter saw a domestic systemwide SSS decline of 1.3% in its core brand, coupled with an EBITDA miss attributed to SSS declines and increased general and administrative costs, signaling difficulties in maintaining profitability. Additionally, concerns regarding the Keke's Breakfast Cafe brand's unproven performance outside Florida and a significant deceleration in sales trends further emphasize the adverse macroeconomic conditions affecting Denny's core lower-income consumer base.