DineEquity, Inc. (NYSE:DIN) operates full-service restaurants in the United States and in other countries around the globe. The company owns and operates two restaurant concepts, which includes Applebee’s Neighborhood Grill & Bar (Applebee's) – a bar and grill concept of the casual dining restaurant industry; and International House of Pancakes (IHOP), which primarily caters to the family dining segment.
Comps at the IHOP brand have not been encouraging over the last few quarters. Though initiatives to improve guest satisfaction via online ordering as well as testing of delivery services and development of an IHOP mobile application are expected to create improved revenue channels, the results are likely to take time.
Also, Applebee’s casual dining restaurants are facing stiff competition from fast-food and quick service restaurants. Steps taken to revitalize the brand via increased focus on food and culinary innovation, consumer satisfaction and marketing are expected to drive comps over the long term, with an improvement likely 2018 onwards.
Meanwhile, an increase in expenses related to sales initiatives, incremental investments in marketing programs and promotional activity to combat competition are weighing on margins. Also, the continuing choppy sales environment in the overall restaurant space might limit revenue growth.
Investors should note that the consensus estimate for DIN has hardly witnessed any significant movement over the last 60 days. Meanwhile, DIN’s earnings performance has been mostly encouraging over the past few quarters with the trailing four-quarter average earnings surprise coming in at a positive 3.76%. However, revenues lagged the Zacks Consensus Estimate in each of the trailing four quarters.
DIN currently has a Zacks Rank #3 (Hold) but that could change following DineEquity’s earnings report which was just released. You can see the complete list of today’s Zacks #1 Rank stocks here.
We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: DIN beats on earnings. Our consensus earnings estimate called for earnings per share of 88 cents, and the company reported adjusted earnings of 91 cents per share.
Revenues: DIN reported revenues of $144.7 million. This missed our consensus estimate of $146.5 million.
Key Stats to Note: Domestic system-wide comps at IHOP and Applebee's declined 3.2% and 7.7%, respectively, in the third quarter of fiscal 2017.
Stock Price Impact: At the time of writing, the stock price of DineEquity was down nearly 1% during pre-market trading hours following the earnings release.
Check back for our full write up on this DIN earnings report later!
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
DineEquity, Inc (DIN): Free Stock Analysis Report
Original post
Zacks Investment Research