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Here's Why Investors Should Find Dine Brands Appetizing Now
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Dine Brands Global, Inc. (DIN - Free Report) , formerly known as DineEquity, Inc. is currently a well-performing restaurant stock and its strong fundamentals could ensure a continued bull run.
An upward revision in earnings estimates for 2018 reflects analysts’ unwavering confidence in the company’s future earnings. Over the last 60 days, the consensus estimate for 2018 earnings rose 34.7%. The company also delivered positive earnings surprises in each of the trailing four quarters, the average beat being 7.26%.
Moreover, shares of the company have returned 30.4% in the past year, outperforming the industry’s gain of 11.4%.
In terms of Earnings Yield (E/P), which basically is inverse of the P/E ratio, the company is positioned better among its industry peers. The metric measures the anticipated yield (or return) that a stock generates based on its earnings and the price paid. Dine Brands holds an earnings yield of 7.81%, suggesting that the stock gives 7.81 cents of earnings for every dollar invested. The company’s earnings yield is higher than that of the industry’s average, which stands at 4.40%.
Dine Brands has a Zacks Rank #1 (Strong Buy) and Momentum Score of B. Back-tested results show that stocks with Momentum Scores of A or B, when combined with a Zacks Rank #1 or 2 handily outperform others.
Let’s delve deeper into other factors that make this stock a lucrative pick.
Brand Transition Initiatives to Drive Sales
In the last reported quarter, Dine Brands mentioned that it has shifted its corporate resources directly to its two brands, resulting in greater autonomy and accountability of the company. To accelerate sustainable growth, the company is focusing on key areas across the organization, including brand leadership, culinary, operations and marketing.
Dine Brands has also developed top-tier consumer insights and analytics, to understand customers and frame strategies likewise. To expand the base business, the company invested in technology and growth platforms such as to-go offering, to develop incremental revenue channels at both IHOP and Applebee's.
In fact, these initiatives have reflected in the fourth-quarter 2017 comps performance. The company expects these strategies to pay off in the first quarter of 2018. In the fourth quarter, Applebee's domestic system-wide comps increased 1.3%. This compares favorably with the third quarter’s decrease of 3.2% and the prior-year quarter’s decline of 7.2%. IHOP’s domestic system-wide comps were down 0.4%, comparing favorably with the last quarter’s decline of 7.7% and the prior-year quarter’s fall of 2.1%.
Notably, the Zacks Consensus Estimate for sales in 2018 is pegged at $677.80 million, reflecting a 12.1% increase from 2017.
Fully Franchised Business Model to Favor Earnings & Returns
The company follows a 100% franchised model that allows it to spread its costs over a larger number of units. The incremental value of each unit added has 90%-plus flow-through to the company’s bottom line.
Although re-franchising weighs on near-term revenues as it replaces company-operated sales with franchised sales, it helps reduce the company’s capital requirements, and drive earnings and return on equity (ROE).
Arguably, earnings growth is of utmost importance for determining a stock’s potential, as surging profit levels often indicate solid prospects (and stock price gains). In 2018, Dine Brands’ earnings per share are expected to grow 22.7%.
Also, the company delivered an ROE of 230.88% in the trailing 12 months against its industry’s 6.5%. This supports its immense growth potential and indicates that Dine Brands reinvests more efficiently compared to peers.
International Expansion Likely to Drive Growth
In addition to growing domestically, Dine Brands is focused on foraying into international markets. Since the inception of the company’s international division in 2013, it has expanded its global footprint from 206 to 269 units at the end of 2017, representing a 7% CAGR.
In 2017, the company experienced the strongest international development in over a decade with its franchisees launching 37 restaurants across both the brands. Additionally, management plans to have roughly 500 international restaurants by 2022.
Zacks Rank & Other Stocks to Consider
Dine Brands’ sports a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks in the restaurant space include Ruth's Hospitality Group , BJ's Restaurants (BJRI - Free Report) and Carrols Restaurant Group . While Ruth's holds the same rank as Dine Brands, BJ's Restaurants and Carrols Restaurant carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ruth's, BJ’s and Carrol’s earnings for 2018 are expected to grow 22.7%, 27% and 30%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Here's Why Investors Should Find Dine Brands Appetizing Now
Dine Brands Global, Inc. (DIN - Free Report) , formerly known as DineEquity, Inc. is currently a well-performing restaurant stock and its strong fundamentals could ensure a continued bull run.
An upward revision in earnings estimates for 2018 reflects analysts’ unwavering confidence in the company’s future earnings. Over the last 60 days, the consensus estimate for 2018 earnings rose 34.7%. The company also delivered positive earnings surprises in each of the trailing four quarters, the average beat being 7.26%.
Moreover, shares of the company have returned 30.4% in the past year, outperforming the industry’s gain of 11.4%.
In terms of Earnings Yield (E/P), which basically is inverse of the P/E ratio, the company is positioned better among its industry peers. The metric measures the anticipated yield (or return) that a stock generates based on its earnings and the price paid. Dine Brands holds an earnings yield of 7.81%, suggesting that the stock gives 7.81 cents of earnings for every dollar invested. The company’s earnings yield is higher than that of the industry’s average, which stands at 4.40%.
Dine Brands has a Zacks Rank #1 (Strong Buy) and Momentum Score of B. Back-tested results show that stocks with Momentum Scores of A or B, when combined with a Zacks Rank #1 or 2 handily outperform others.
Let’s delve deeper into other factors that make this stock a lucrative pick.
Brand Transition Initiatives to Drive Sales
In the last reported quarter, Dine Brands mentioned that it has shifted its corporate resources directly to its two brands, resulting in greater autonomy and accountability of the company. To accelerate sustainable growth, the company is focusing on key areas across the organization, including brand leadership, culinary, operations and marketing.
Dine Brands has also developed top-tier consumer insights and analytics, to understand customers and frame strategies likewise. To expand the base business, the company invested in technology and growth platforms such as to-go offering, to develop incremental revenue channels at both IHOP and Applebee's.
In fact, these initiatives have reflected in the fourth-quarter 2017 comps performance. The company expects these strategies to pay off in the first quarter of 2018. In the fourth quarter, Applebee's domestic system-wide comps increased 1.3%. This compares favorably with the third quarter’s decrease of 3.2% and the prior-year quarter’s decline of 7.2%. IHOP’s domestic system-wide comps were down 0.4%, comparing favorably with the last quarter’s decline of 7.7% and the prior-year quarter’s fall of 2.1%.
Notably, the Zacks Consensus Estimate for sales in 2018 is pegged at $677.80 million, reflecting a 12.1% increase from 2017.
Fully Franchised Business Model to Favor Earnings & Returns
The company follows a 100% franchised model that allows it to spread its costs over a larger number of units. The incremental value of each unit added has 90%-plus flow-through to the company’s bottom line.
Although re-franchising weighs on near-term revenues as it replaces company-operated sales with franchised sales, it helps reduce the company’s capital requirements, and drive earnings and return on equity (ROE).
Arguably, earnings growth is of utmost importance for determining a stock’s potential, as surging profit levels often indicate solid prospects (and stock price gains). In 2018, Dine Brands’ earnings per share are expected to grow 22.7%.
Also, the company delivered an ROE of 230.88% in the trailing 12 months against its industry’s 6.5%. This supports its immense growth potential and indicates that Dine Brands reinvests more efficiently compared to peers.
International Expansion Likely to Drive Growth
In addition to growing domestically, Dine Brands is focused on foraying into international markets. Since the inception of the company’s international division in 2013, it has expanded its global footprint from 206 to 269 units at the end of 2017, representing a 7% CAGR.
In 2017, the company experienced the strongest international development in over a decade with its franchisees launching 37 restaurants across both the brands. Additionally, management plans to have roughly 500 international restaurants by 2022.
Zacks Rank & Other Stocks to Consider
Dine Brands’ sports a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks in the restaurant space include Ruth's Hospitality Group , BJ's Restaurants (BJRI - Free Report) and Carrols Restaurant Group . While Ruth's holds the same rank as Dine Brands, BJ's Restaurants and Carrols Restaurant carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ruth's, BJ’s and Carrol’s earnings for 2018 are expected to grow 22.7%, 27% and 30%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>