Critical Review: Bloomin’ Brands (BLMN) and Denny’s Corporation (DENN)

Bloomin’ Brands (NASDAQ: BLMN) and Denny’s Corporation (NASDAQ:DENN) are both small-cap cyclical consumer goods & services companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, profitability, dividends, earnings, valuation and institutional ownership.

Volatility & Risk



Bloomin’ Brands has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500. Comparatively, Denny’s Corporation has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Earnings and Valuation

This table compares Bloomin’ Brands and Denny’s Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Bloomin’ Brands $4.25 billion 0.43 $41.74 million $0.77 26.13
Denny’s Corporation $506.95 million 1.63 $19.40 million $0.52 24.40

Bloomin’ Brands has higher revenue and earnings than Denny’s Corporation. Denny’s Corporation is trading at a lower price-to-earnings ratio than Bloomin’ Brands, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Bloomin’ Brands and Denny’s Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bloomin’ Brands 1.93% 94.30% 5.15%
Denny’s Corporation 7.21% -52.30% 13.31%

Dividends

Bloomin’ Brands pays an annual dividend of $0.32 per share and has a dividend yield of 1.6%. Denny’s Corporation does not pay a dividend. Bloomin’ Brands pays out 41.6% of its earnings in the form of a dividend.

Insider & Institutional Ownership

93.6% of Denny’s Corporation shares are held by institutional investors. 7.0% of Bloomin’ Brands shares are held by insiders. Comparatively, 5.2% of Denny’s Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Bloomin’ Brands and Denny’s Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bloomin’ Brands 1 8 3 0 2.17
Denny’s Corporation 0 2 1 0 2.33

Bloomin’ Brands presently has a consensus target price of $21.00, indicating a potential upside of 4.37%. Denny’s Corporation has a consensus target price of $12.67, indicating a potential downside of 0.18%. Given Bloomin’ Brands’ higher possible upside, equities analysts plainly believe Bloomin’ Brands is more favorable than Denny’s Corporation.

Bloomin’ Brands Company Profile

Bloomin’ Brands, Inc. is a holding company. The Company owns and operates casual, upscale casual and fine dining restaurants. The Company operates through two segments: U.S. and International. The U.S. segment includes all brands operating in the United States. The International segment includes brands operating outside the United States. As of December 25, 2016, the Company had a portfolio of four restaurant concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar. OSI Restaurant Partners, LLC (OSI) is the Company’s primary operating entity. New Private Restaurant Properties, LLC (PRP), an indirect subsidiary of the Company, leases the Company-owned restaurant properties to OSI’s subsidiaries. As of December 25, 2016, the Company owned and operated 1,276 restaurants and franchised 240 restaurants across 48 states, Puerto Rico, Guam and 20 countries.

Denny’s Corporation Company Profile

Denny’s Corporation (Denny’s) operates a franchised full-service restaurant chain. The Company, through its subsidiary, Denny’s, Inc., owns and operates the Denny’s brand. As of December 28, 2016, the Denny’s brand consisted of 1,733 franchised, licensed and Company-operated restaurants around the world, including 1,610 restaurants in the United States and 123 international locations. As of December 28, 2016, 1,564 of its restaurants were franchised or licensed and 169 were Company-operated. In addition to its breakfast-all-day items, Denny’s offers a selection of lunch and dinner items, including burgers, sandwiches, salads and skillet entrees, along with an assortment of beverages, appetizers and desserts. The Company’s Fit Fare menu helps its guests identify items suited to their dietary needs. Most Denny’s restaurants offer special items for children and seniors. The Company has restaurant locations within travel centers, primarily with Pilot and Pilot Flying J Travel Centers.

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