Applebee's Parent Dine Brands' Strong Free Cash Flow And Accelerated Share Repurchase Is Noteworthy, Analyst Upgrades Stock

Wedbush analyst Nick Setyan upgraded Dine Brands Global, Inc. DIN to Outperform from Neutral, raising the price forecast to $47 from $34.

The analyst identifies key catalysts for Dine Brands’ multiple expansions over the next twelve months. According to Setyan, a $100 million + accelerated share repurchase plan is likely in the second half of 2025 following Dine Brands’ refinancing, representing over 20% of the company’s current market capitalization.

The analyst forecasts adjusted free cash flow of $99.2 million in 2024 and $107.5 million in 2025, or free cash flow yields of 22% and 25%, respectively.

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Additionally, the firm’s strong free cash flow generation is expected to support ongoing annual repurchases of $60 million+ after the ASR.

Both Applebee’s and IHOP are poised to optimize their value propositions as they head into 2025, with current offers stabilizing and near-term same-store sales growth remaining largely in line, the analyst notes.

Dividend payments are $31.8 million and $30.9 million in 2024 and 2025, respectively, with a current dividend yield of 6.5%. The analyst raised the company’s FY25 EPS estimate to $6.43 from $6.34.

Is DIN A Good Stock To Buy?

An investor can make a few decisions when deciding whether a stock is a good buy. In addition to valuation metrics and price action which you can find on Benzinga's quote pages – like Dine Brands Global‘s page for example – there are factors like whether or not a company pays a dividend or buys a large portion of its stock each quarter.

These are known as capital allocation programs. Dine Brands does pay a dividend, which yields 5.06% per year as of the closing price on Oct. 1, 2024. Feel free to search Benzinga's dividend calendar for the next company that is due to pay a dividend and determine what kind of yield you can earn for holding a share of the company.

For example, if you're looking to earn an annualized return of 13.44%, you'll need to buy a share of Saba Cap Inc & Opps by the Oct. 9, 2024. Once done, you can expect to receive a nominal payout of $0.09 on Oct. 31, 2024.

Buyback programs are obviously different and highly variable. A company can approve a buyback program and purchase shares as it sees fit over the course of time in which the buyback was authorized. Looking through the latest news on Dine Brands Global will often yield whether or not the company has approved a buyback program recently. Buyback programs usually serve as a support for share prices, serving as a backstop for demand.

Price Action: DIN shares are trading higher by 13.1% to $35.32 at last check Tuesday.

Photo via Wikimedia Commons

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