DENN (Post-Call) Beyond Refranchising
After today’s (Tuesday’s) market close, Denny’s (DENN; Buy) reported adjusted Q4 2019 EPS of $0.23, ahead of our $0.16 forecast and sell-side consensus (according to Consensus Metrix) of $0.17. Factors in the Q4 EPS outperformance include: (1) better-than-expected Product Costs/Company Restaurant Sales (24.3% actual vs. our 24.8% forecast), (2) better-than-expected Payroll & Benefits/Company Restaurant Sales (37.6% actual vs. our 38.1% estimate, (3) better-than-expected Other Operating Costs/Company Restaurant Sales (14.2% actual vs. our 15.5% projection, (4) better-than-expected G&A Expenses/Revenues (13.5% actual vs. our 14.2% estimate), (5) better-than-expected D&A/Revenues (3.7% actual vs. our 4.3% forecast), (6) better-than-expected net interest expense ($3.57 million actual vs. our $4.50 million projection), and (7) a favorable tax rate (20.0% actual vs. our 21.3% estimate).