DENN (Post-Call) Moves Closer to Beyond Refranchising
After Tuesday’s market close, Denny’s (DENN; Buy) reported adjusted Q3 EPS of $0.18, coming in ahead of our $0.16 forecast and sell-side consensus (according to Consensus Metrix) of $0.16. We attribute the EPS beat to a combination of: (1) better-than-expected Payroll and Benefits/Company Restaurant Sales (37.4% actual vs. 38.3% projected), (2) better-than-anticipated G&A/Revenues (13.2% actual vs. 13.8% estimated), (3) better-than-expected D&A/Revenues (3.5% actual vs. 4.2% forecasted), (4) lower-than-anticipated interest expense ($4.2 million actual vs. $5.3 million projected), and (5) a favorable adjusted tax rate (15.5% actual vs. 21.2% forecasted) — all partially offset by some other factors (such as lower-thananticipated Company Restaurant Sales, due to the faster-than-expected pace of refranchising).