Dine Brands Global (NYSE:DIN) Stock

Dine Brands Global

Dine Brands Global Inc owns and franchises thousands of restaurants under the Applebee's and International House of Pancakes names. Almost all company restaurants are located in the United States and franchised. Royalty revenue, which the company gets from franchisees based on franchisees' sales, accounts for roughly three-quarters of total company revenue. The company also earns revenue by leasing restaurant sites to franchisees. The company has four reportable segments Franchise operations, (an aggregation of Applebee's and IHOP franchise operations), Rental operations, Financing operations, and Company-operated restaurant operations. The majority of revenue is derived from the Franchise operations segment.

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Barclays analyst Jeffrey A. Bernstein highlights key trends for U.S. restaurants in 2025, including mixed earnings results, easing inflation, and consumer outlook uncertainty. 

Easing Inflation Brings Hope To Restaurants In 2025 But Uncertainty Lingers: Analyst Upgrades Shake Shack And Dutch Bros

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Dine Brands stock rises after Q3 earnings beat estimates, despite lower sales and negative same-restaurant sales at Applebee&#39;s and IHOP.

Dine Brands Q3 Earnings Surprise Amid Weak Applebee&#39;s And IHOP Sales;  Q4 Strategy In Focus

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Downgrades

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This Booz Allen Hamilton Analyst Is No Longer Bullish; Here Are Top 5 Downgrades For Monday

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Keybanc analyst Eric Gonzalez maintains Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) with a Overweight and lowers the price target from $36 to $35.

Price Target

Keybanc Maintains Overweight on Dine Brands Global, Lowers Price Target to $35

Barclays analyst Jeffrey A. Bernstein has outlined top themes to watch out for in the U.S. restaurants in 2025.
The restaurant industry, according to the analyst, is experiencing mixed results as it navigates a volatile environment heading into the third quarter of 2024.
A recent preview highlighted that many companies have struggled to meet expectations regarding same-store sales and earnings per share, noted the analyst.
Despite these challenges, most have shared optimistic outlooks on recent sales trends.
As 2024 progresses, the key focus remains the consumer outlook, which has been unpredictable. On a positive note, unemployment rates remain near record lows, and wages continue to rise, contributing to a healthy increase in real disposable income, the analyst added.
Inflation has also eased, allowing the Federal Reserve to slow down its rate changes, said the analyst.
However, the analyst warned that the cost of living, including high rent and basic expenses, continues to pressure consumers.
Consumer confidence has remained lower than pre-pandemic levels, and many restaurants are working to improve traffic by offering greater value in response to inflation concerns.
Commodity inflation, excluding coffee, has shown signs of normalization and December 2024 saw a year-on-year increase of around 16%, mainly driven by coffee prices, asserted the analyst.
Restaurants are expecting mid-single-digit inflation in 2025, assuming current prices hold and the industry is hoping for a more stable cost environment that can support margins amidst uncertain sales projections, added the analyst.
The analyst expressed concern about labor costs and said while wage inflation has slowed from the peaks seen during 2021 and 2022, December 2024 saw a year-on-year wage increase of 10.3%.
In menu pricing, restaurants are easing the aggressive price hikes seen in recent years and overall, the industry is moving towards smaller price increases as commodity and labor inflation stabilizes, said the analyst.
The analyst upgraded both Shake Shack Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SHAK#NYSE">SHAK</a>) and Dutch Bros Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BROS#NYSE">BROS</a>) to Overweight from Equal Weight.
The analyst downgraded Bloomin&#8217; Brands Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BLMN#NASDAQ">BLMN</a>) and Dine Brands Global Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) to Equal Weight from Overweight.
Photo via Shutterstock.

UBS analyst Dennis Geiger downgrades Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) from Buy to Neutral and lowers the price target from $44 to $32.

UBS Downgrades Dine Brands Global to Neutral, Lowers Price Target to $32

Barclays analyst Jeff Kessler downgrades Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) from Overweight to Equal-Weight and lowers the price target from $43 to $32.

Barclays Downgrades Dine Brands Global to Equal-Weight, Lowers Price Target to $32

Piper Sandler analyst Brian Mullan maintains Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) with a Neutral and lowers the price target from $40 to $38.

Piper Sandler Maintains Neutral on Dine Brands Global, Lowers Price Target to $38

Wedbush analyst Nick Setyan reiterates Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) with a Outperform and maintains $47 price target.

Reiteration

Wedbush Reiterates Outperform on Dine Brands Global, Maintains $47 Price Target

UBS analyst Dennis Geiger maintains Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) with a Buy and lowers the price target from $51 to $44.

UBS Maintains Buy on Dine Brands Global, Lowers Price Target to $44

Barclays analyst Jeff Kessler maintains Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) with a Overweight and raises the price target from $38 to $43.

Barclays Maintains Overweight on Dine Brands Global, Raises Price Target to $43

WIIM

Dine Brands Global shares are trading higher after the company reported better-than-expected Q3 adjusted EPS results.

Dine Brands Global, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) shares are trading <a target="_blank" href="https://www.benzinga.com/movers" rel="noreferrer noopener">higher on Wednesday.</a>
The company reported third-quarter adjusted earnings per share of $1.44, <a target="_blank" href="https://www.benzinga.com/pressreleases/24/11/b41769785/dine-brands-global-inc-reports-third-quarter-2024-results" rel="noreferrer noopener">beating the analyst consensus of $1.34.</a> Quarterly sales of $195.034 million (down 3.7%) missed the street view of $198.563 million. The decrease was primarily due to the negative comparable same-restaurant sales growth at Applebee&#8217;s and IHOP.
Applebee&#8217;s year-over-year domestic comparable same-restaurant sales declined 5.9% for the third quarter. IHOP&#8217;s year-over-year domestic comparable same-restaurant sales declined 2.1% for the quarter.
&#8220;For the fourth quarter, we are enhancing our value proposition for guests and remain focused on executing our plans across our brands,&#8221; said John Peyton, chief executive officer, Dine Brands Global.
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Consolidated adjusted EBITDA for the third quarter was $61.9 million compared to $60.6 million in the year-ago period.
Total cash and equivalents and restricted cash of approximately $235.1 million, of which approximately $169.6 million was unrestricted cash.
Outlook: The company reiterated the FY24 outlook for Applebee&#8217;s domestic system-wide comparable same-restaurant sales performance to range between <a href="https://www.benzinga.com/calendars/guidance">negative 4% and negative 2%.</a>
The company also reiterated IHOP&#8217;s domestic system-wide comparable same-restaurant sales performance forecast between negative 2% and 0%.
The company continues to expect consolidated adjusted EBITDA to range approximately $245 million to $255 million.
Price Action: DIN shares are trading higher by 13.1% to $35.23 at last check Wednesday.
Photo via <a href="https://commons.wikimedia.org/wiki/File:Applebee%27s_Restaurant.jpg">Wikimedia Commons</a>
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Dine Brands Q3 Earnings Surprise Amid Weak Applebee's And IHOP Sales;  Q4 Strategy In Focus

Financial Performance Guidance for 2024
The Company's fiscal year 2024 guidance items have been updated as follows:
<ul>
<li>Reiterated: Applebee's domestic system-wide comparable same-restaurant sales performance is expected to range between negative 4% and negative 2%.</li>
<li>Reiterated: IHOP's domestic system-wide comparable same-restaurant sales performance is expected to range between negative 2% and 0%.</li>
<li>Reiterated: Domestic development activity for Applebee's franchisees is between 25 and 35 net fewer restaurants.</li>
<li>Reiterated: Domestic development activity by IHOP franchisees and area licensees is expected to be between 0 and 10 net new openings.</li>
<li>Reiterated: Consolidated adjusted EBITDA is expected to range between approximately $245 million and $255 million.</li>
<li>Reduced: G&amp;A expenses are expected to range between approximately $195 million and $200 million (versus between $200 million and $205 million previously). This total includes non-cash stock-based compensation expense and depreciation of approximately $35 million.</li>
<li>Reiterated: Gross capital expenditures are expected to range between approximately $14 million and $16 million.</li>
</ul>

Dine Brands Global Reiterated FY24 Adj. EBITDA ~$245M-$255M

Earnings Beats

Earnings Misses

Dine Brands Global Q3 2024 Adj. EPS $1.44 Beats $1.34 Estimate, Sales $195.034M Miss $198.563M Estimate

Top Wall Street analysts changed their outlook on these top names. For a complete view of all analyst rating changes, including upgrades and downgrades, please see our <a href="https://www.benzinga.com/analyst-stock-ratings">analyst ratings page</a>.
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<li><a href="https://www.benzinga.com/topic/andrew-wolf">CL King analyst Andrew Wolf</a> downgraded Dine Brands Global, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) from Buy to Neutral. Dine Brands Global shares closed at $30.66 on Friday. <a href="https://www.benzinga.com/quote/DIN/analyst-ratings">See how other analysts view this stock.</a></li>
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CL King analyst Andrew Wolf downgrades Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) from Buy to Neutral.

CL King Downgrades Dine Brands Global to Neutral

Benchmark analyst Todd Brooks reiterates Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) with a Hold.

Benchmark Reiterates Hold on Dine Brands Global

During times of turbulence and uncertainty in the markets, many investors turn to dividend-yielding stocks. These are often companies that have high free cash flows and reward shareholders with a<a href="https://www.benzinga.com/yield-investments"> high dividend payout</a>.
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<li>JP Morgan analyst Matthew Boss downgraded rating on the stock from Neutral to Underweight with a price target of $19 on Aug. 29. This analyst has an accuracy rate of 68%.</li>
<li>Evercore ISI Group analyst Michael Binetti maintained an In-Line rating and slashed the price target from $22 to $20 on Aug. 29. This analyst has an accuracy rate of 61%.</li>
<li>Recent News: On Aug. 28, Kohl's posted better-than-expected second-quarter financial results.</li>
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<h3 class="wp-block-heading">Dine Brands Global, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>)</h3>
<ul>
<li>Dividend Yield: 6.54%</li>
<li>Keybanc analyst Eric Gonzalez maintained an Overweight rating and lowered the price target from $37 to $36 on Oct. 18. This analyst has an accuracy rate of 70%.</li>
<li>Truist Securities analyst Jake Bartlett downgraded the stock from Buy to Hold and cut the price target from $66 to $37 on Oct. 4. This analyst has an accuracy rate of 77%.</li>
<li>Recent News: Dine Brands Global will announce its third quarter financial results on Nov. 6, before the stock market opens.</li>
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Keybanc analyst Eric Gonzalez maintains Dine Brands Global (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIN#NYSE">DIN</a>) with a Overweight and lowers the price target from $37 to $36.

Keybanc Maintains Overweight on Dine Brands Global, Lowers Price Target to $36

CBRL

Shares of restaurant stocks are trading lower possibly amid overall market weakness due to a rise in the 10-year Treasury yield.

Dine Brands Global, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/din#NYSE">DIN</a>)&nbsp; is the driving force behind beloved restaurant sector brands like Applebee&#39;s, IHOP, and Fuzzy&#39;s Taco Shop. Through a strategic franchise model, Dine Brands has successfully established a widespread presence across the globe, capturing the hearts (and stomachs) of a large and diverse customer base.
The company&#39;s franchise-heavy approach offers unique advantages for scaling operations and building brand recognition, but Dine Brands hasn&#39;t been immune to industry challenges.&nbsp;
However, despite these challenges, Dine Brands remains a company with a diverse portfolio of established brands and an extensive global reach. To address its challenges and unlock growth potential, the company has been actively implementing a strategic transformation focused on enhancing the customer experience, menu innovation, and digital engagement, but will this revitalized approach be enough to unlock Dine Brands&#39; potential and propel the company towards a path of growth and profitability?
<h2>A Mixed Picture With Upside</h2>
Dine Brands&#39; financial reports reflect the broader challenges currently being faced by the restaurant industry. While the company has a strong portfolio of established brands like Applebee&#39;s and IHOP and an extensive global reach, it has grappled with declining same-store sales and difficulties meeting its financial guidance.&nbsp;
Dine Brand&#39;s earnings report for the second quarter of 2024 showed a 1% decline in revenue compared to the same quarter last year, with earnings per share (EPS) of $1.71 exceeding analyst expectations but falling short of the previous year&#39;s $1.82.
However, several factors suggest the potential for a turnaround. Notably, Dine Brands&#39; analyst community upgraded the stock, raising the price target to $47 from $34. The bullish outlook hinges on several key catalysts, including a potential $100 million+ accelerated share repurchase plan, the company&#39;s free cash flow generation (forecasted at $99.2 million in 2024 and $107.5 million in 2025), and ongoing efforts to optimize the value proposition of Applebee&#39;s and IHOP.
Despite these positive signals, Dine Brands faces several challenges. The restaurant industry is currently contending with inflationary pressures, rising costs, and the potential for an economic downturn, which could further impact the company&#39;s revenue and earnings growth. Dine Brand&#39;s competition remains strong, with established players vying for market share alongside the rapidly expanding fast-casual segment.&nbsp;
Specifically, Dine Brands needs to address the declining appeal of casual dining among younger demographics and find innovative ways to enhance the customer experience and drive traffic to its restaurants. Furthermore, Dine Brands carries a significant debt load with a debt-to-equity ratio (D/E) of around five as of the latest quarter. The high debt levels could limit its financial flexibility and hinder its ability to invest in growth initiatives. The company&#39;s negative return on equity of -35.88% in the latest quarter also raises concerns about its efficiency in generating profits from shareholder investments.
<h2>Dine Brands Eyes Turnaround with Debt Management and Stock Buyback</h2>
Dine Brands&#39; potential for a significant turnaround, fueled by analyst&#39;s optimistic projections and the planned stock buyback, is undeniable. However, a cautious approach is warranted when considering an investment in this company. The current low stock valuation, with shares down 30% year-to-date, could reflect the market&#39;s apprehension about Dine Brands&#39; ability to successfully execute its turnaround strategy in the face of current headwinds. The ongoing decline in same-store sales, a critical measure of a restaurant company&#39;s health, remains a concern and could persist if macroeconomic conditions worsen.
Dine Brands has been proactive in managing its considerable debt load. The company recently refinanced its debt to lower interest expenses and gain greater financial flexibility. Additionally, a significant portion of the company&#39;s strong free cash flow is earmarked for an accelerated share repurchase program in the second half of 2025. This initiative aims to reduce the number of outstanding shares, lowering the debt-to-equity ratio and potentially boosting earnings per share.
In addition to the debt reduction, Dine Brands is laser-focused on enhancing its core brands, Applebee&#39;s and IHOP. This includes initiatives to elevate the customer experience, introduce menu innovations like all-day breakfast and gourmet burgers to cater to evolving consumer preferences, and bolster digital engagement through loyalty programs to attract a younger demographic. Dine Brands also recognizes the vital role of its franchisees and is committed to supporting them, including financial assistance, operational guidance, and marketing resources. While the primary focus is improving domestic performance, Dine Brands continues exploring international expansion opportunities for long-term revenue growth and diversification.
<h2>Navigating Challenges: Dine Brands&#39; Long-Term Growth Story</h2>
Several indicators suggest a positive outlook for Dine Brands&#39; future. The analyst upgrade and increased price target reflect optimism about the company&#39;s ability to overcome challenges and deliver improved financial results in the coming years. While acknowledging the current difficulties, management remains confident in the company&#39;s long-term potential and believes the strategic initiatives outlined above will position Dine Brands for sustained growth and profitability.
However, investors should not overlook the inherent risks associated with this investment. The restaurant industry is highly sensitive to economic fluctuations, and a potential downturn could significantly impact Dine Brands. Consumers may reduce spending on dining out, leading to lower restaurant traffic and impacting revenue and profitability. The competitive landscape also remains intense, requiring Dine Brands to execute its strategies flawlessly to gain market share and maintain brand relevance in a crowded field. Additionally, the success of the turnaround strategy hinges on the company&#39;s ability to implement its initiatives effectively, and unforeseen challenges may arise during this transformation
Dine Brands offers a compelling investment opportunity with significant upside potential, particularly given the analyst upgrades and the potential for a stock buyback. However, it is not a risk-free investment. Investors with higher risk tolerance and a long-term investment horizon may consider adding Dine Brands to their portfolio. However, it is crucial to carefully weigh the company&#39;s strategic initiatives, the competitive landscape, and potential economic risks before making investment decisions.
The article &quot;<a href="https://www.marketbeat.com/originals/applebees-parent-company-dine-brands-is-it-time-to-take-a-bite/">Dine Brands&#39; Transformation Plan: A Recipe for Recovery?</a>&quot; first appeared on MarketBeat.

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