DENN Does Anybody Want to See Denny’s Acquire Another Concept

Since reporting its third-quarter results and hosting its related conference call late last month, Denny’s (DENN; Buy) stock has mostly drifted downward. We believe that one factor contributing to this slide has been concern on the Street that Denny’s might acquire part or all of another restaurant concept. In our view, it would be a mistake for Denny’s to do so. We believe the odds do not favor Denny’s pursuing this route, although we (of course) cannot rule out this possibility with 100% certainty. We reiterate our Buy rating on DENN, and note the following:

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