After Denny’s Corporation’s ( NASDAQ:DENN ) recent earnings announcement in September 2018, it seems that analyst forecasts are fairly pessimistic, with earnings expected to decline by -3.6% in the upcoming year compared with the past 5-year average growth rate of 8.3%. With trailing-twelve-month net income at current levels of US$40m, the consensus growth rate suggests that earnings will decline to US$38m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here .
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How is Denny’s going to perform in the near future?
The view from 5 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of DENN’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$40m and the final forecast of US$43m by 2022, the annual rate of growth for DENN’s earnings is 5.2%. This leads to an EPS of $0.99 in the final year of projections relative to the current EPS of $0.58. With a current profit margin of 7.5%, this movement will result in a margin of 11% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Denny’s, I’ve compiled three fundamental aspects you should look at:
- Financial Health : Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation : What is Denny’s worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Denny’s is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Denny’s? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com .