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Category: Stock Market and Dine Brands
Date: 4 November 2019 Stock Price: $75.42 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Dine Brands, franchise owner of Applebee's Neighborhood Grill & Bar and IHOP with the group having over 3 600 restaurants
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About Dine Brands
Based in Glendale, California, Dine Brands Global, Inc, through its subsidiaries, franchises restaurants under the Applebee's Neighborhood Grill & Bar and IHOP brands. With over 3,600 restaurants combined in 18 countries and approximately 370 franchisees, Dine Brands Global is one of the largest full-service restaurant companies in the world.
Financial overview of Dine Brands' 3rd quarter 2019 earnings results
The data below refers to the latest quarter's data (unless specified otherwise)
- Total revenues: $217.405 million (up from $194.099 million for the same quarter of the previous year)
- Total revenues increased by 9.1% over the last 12 months
- Cost of revenues: $127.685 million (up from $101.473 million for the same quarter of the previous year)
- Cost of revenues increased by 25.8% over the last 12 months
- Net income: $23.917 million (up from $23.587 million for the same quarter of the previous year)
- Diluted earnings per share: $1.36 (up from $1.29 for the same quarter of the previous year)
- PE ratio of Dine Brands: 13.8
- PE ratio of Dine Brands: 13.8
- Number of shares in issue: 17.055 million (down from 17.738 million for the same quarter of the previous year)
- Cash and cash equivalents: $100.518 million
- Cash and cash equivalents per share: $5.89
- Cash and cash equivalents makes up 7.8% of Dine Brands' market capital
- Cash and cash equivalents makes up 5.03% of Dine Brands' total assets
- Accounts receivable: $91.426 million
- Accounts receivable makes up 4.57% of Dine Brands' total assets
- Cash generated from operations (for 9 months): $105.599 million
- Cash generated from operations per share (for 9 months): $6.19
Dine Brands (NYSE: DIN) management commentary on 3rd quarter 2019 earnings
GLENDALE, Calif.--(BUSINESS WIRE)--Oct. 30, 2019-- Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill + Bar® and IHOP® restaurants, today announced financial results for the third quarter of 2019.
“We are pleased with our overall performance. Our business model continues to deliver robust margin expansion and generate significant adjusted free cash flow. IHOP achieved its seventh consecutive quarter of positive sales growth. While Applebee’s faced a difficult comparison against very strong same-restaurant sales in the third quarter of 2018, we are confident in the brand’s strategy that’s in place,” said Steve Joyce, Chief Executive Officer of Dine Brands Global, Inc. Mr. Joyce added, “We are seeing significant unit growth opportunities as demonstrated by the largest multi-unit franchise agreement signed in IHOP’s history.”
“We are pleased with our overall performance. Our business model continues to deliver robust margin expansion and generate significant adjusted free cash flow. IHOP achieved its seventh consecutive quarter of positive sales growth. While Applebee’s faced a difficult comparison against very strong same-restaurant sales in the third quarter of 2018, we are confident in the brand’s strategy that’s in place,” said Steve Joyce, Chief Executive Officer of Dine Brands Global, Inc. Mr. Joyce added, “We are seeing significant unit growth opportunities as demonstrated by the largest multi-unit franchise agreement signed in IHOP’s history.”
Financial Performance Guidance for 2019
Dine Brands revises certain components of its financial performance guidance for 2019 contained in the press release issued on July 31, 2019 and the Form 8-K filed on the same day, as follows. The projections are as of this date and do not take into consideration any transactions the Company may enter into after such date that may impact this guidance. The Company assumes no obligation to update or supplement these estimates.
Dine Brands revises certain components of its financial performance guidance for 2019 contained in the press release issued on July 31, 2019 and the Form 8-K filed on the same day, as follows. The projections are as of this date and do not take into consideration any transactions the Company may enter into after such date that may impact this guidance. The Company assumes no obligation to update or supplement these estimates.
- Revised expectations for Applebee’s domestic system-wide comparable same-restaurant sales performance to range between 0.0% and negative 1.0%. This compares to previous expectations of between 0.0% and positive 1.5%.
- Revised expectations for IHOP’s domestic system-wide comparable same-restaurant sales performance to range between positive 1.0% and positive 2.0%. This compares to previous expectations of between positive 1.0% and positive 3.0%.
- Revised development activity by Applebee’s franchisees, which is expected to result in net closures between 30 and 40 restaurants globally, the majority of which are expected to be domestic closures. This compares to previous expectations of between 20 and 30 net closures globally.
- Revised expectations for development activity by IHOP franchisees and area licensees, which is now expected to result in between 10 and 20 net new restaurants globally, the majority of which are expected to be domestic openings. This compares to previous expectations of between 20 and 30 net new restaurants globally.
- Reiterated expectations for total segment profit, excluding the company restaurants segment, which is expected to be between approximately $370 million and $380 million.
- Reiterated expectations for general and administrative expenses, which are expected to range between approximately $163 million and approximately $166 million, including non-cash stock-based compensation expense and depreciation totaling approximately $40 million. This projection includes approximately $6 million of general and administrative expenses related to the company restaurants segment.
- Reiterated expectations for GAAP net income, which is expected to range between approximately $97 million and approximately $106 million.
- Reiterated consolidated adjusted EBITDA, which is expected to range between approximately $268 million and approximately $277 million. This projection includes company restaurants segment EBITDA, which is expected to be between approximately $9 million and approximately $11 million. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
- Revised expectations for GAAP earnings per diluted share, which are now expected to range from $5.70 to $5.95. This compares to previous expectations of between $5.75 to $6.00.
- Revised expectations for adjusted earnings per diluted share, which are now expected to range from $6.75 to $7.00. This compares to previous expectations of between $6.80 to $7.05.
Dine Brands (NYSE: DIN) stock price history
The image below obtained from Google, shows the stock price history of Dine Brands over the last 5 years. And its been a pretty miserable time for Dine Brands stockholders.5 years ago the stock of Dine Brands was trading at around $92.70 a stock and its currently trading at $75.42 a stock. That's a loss of -18.6% suffered by Dine Brands stockholders over the last 5 years.
The stock of Dine Brands is trading at a lot closer to its 52 week low of $65.63 than it is to its 52 week high of $104 stock, which to us is a clear indication that the short term sentiment and momentum of Dine Brands stock is very negative at this point in time,
The stock of Dine Brands is trading at a lot closer to its 52 week low of $65.63 than it is to its 52 week high of $104 stock, which to us is a clear indication that the short term sentiment and momentum of Dine Brands stock is very negative at this point in time,
Recent coverage of Dine Brands
The extract below discusses the latest news regarding Dine Brands as obtained from TheStreet.com
Dine Brands International announced today an agreement with Saeed Minhas, of Minhas Holdings, to bring the IHOP brand to exclusive locations in the Greater Toronto Area. The agreement calls for 15 new IHOP locations over seven years. The first location is expected to open mid-year 2020. The new locations are expected to create approximately 900 jobs and contribute up to $15 million to the construction industry in the Greater Toronto Area. "IHOP is a strong brand with a huge fan base around the world, and we are excited to expand its presence in Canada," said Saeed Minhas, CEO of Minhas Holdings. "We can't wait for guests in the Greater Toronto Area to experience the brand's warm hospitality and commitment to quality in its breakfast, lunch, and dinner menu offerings." "Canada was the first international market we opened for IHOP back in 1969, making this year our 50 th anniversary in the country," said Steve Joyce, Chief Executive Officer, Dine Brands Global. "Canada continues to be a key market in our international development and growth strategy."
"The opportunity to partner with Saeed Minhas as a franchisee was also a major factor in our decision," Joyce continued. "In addition to his work as a real-estate developer, Saeed has valuable experience in the hospitality industry as a franchisee for Marriott and IHG as well as local market knowledge and presence." "Canada is a great strategic business choice for expansion outside of the U.S. for many reasons including geographic proximity and great brand awareness," said William Urrego, Vice President of International Operations, Dine Brands Global
Dine Brands International announced today an agreement with Saeed Minhas, of Minhas Holdings, to bring the IHOP brand to exclusive locations in the Greater Toronto Area. The agreement calls for 15 new IHOP locations over seven years. The first location is expected to open mid-year 2020. The new locations are expected to create approximately 900 jobs and contribute up to $15 million to the construction industry in the Greater Toronto Area. "IHOP is a strong brand with a huge fan base around the world, and we are excited to expand its presence in Canada," said Saeed Minhas, CEO of Minhas Holdings. "We can't wait for guests in the Greater Toronto Area to experience the brand's warm hospitality and commitment to quality in its breakfast, lunch, and dinner menu offerings." "Canada was the first international market we opened for IHOP back in 1969, making this year our 50 th anniversary in the country," said Steve Joyce, Chief Executive Officer, Dine Brands Global. "Canada continues to be a key market in our international development and growth strategy."
"The opportunity to partner with Saeed Minhas as a franchisee was also a major factor in our decision," Joyce continued. "In addition to his work as a real-estate developer, Saeed has valuable experience in the hospitality industry as a franchisee for Marriott and IHG as well as local market knowledge and presence." "Canada is a great strategic business choice for expansion outside of the U.S. for many reasons including geographic proximity and great brand awareness," said William Urrego, Vice President of International Operations, Dine Brands Global
Dine Brands (NYSE: DIN) stock valuation
So what do we value Dine Brands' stock at after the release of their 3rd quarter 2019 earnings and the fiscal guidance provided? Based on Dine Brands' earnings report and fiscal guidance provided our valuation models provides a target (full value) price for Dine Brands at $108.80 a stock. We therefore believe that the stock of Dine Brands is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $108.80 therefore we believe a good entry point into Dine Brands stock is at $97.90 or below. We expect the stock of Dine Brands to kick up from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is undervalued.
Since Dine Brands is trading at well below our suggested entry price we rate the stock fo Dine Brands as a buy
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $108.80 therefore we believe a good entry point into Dine Brands stock is at $97.90 or below. We expect the stock of Dine Brands to kick up from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is undervalued.
Since Dine Brands is trading at well below our suggested entry price we rate the stock fo Dine Brands as a buy
Next earnings release of Dine Brands
It is expected that Dine Brands will publish their 4th quarter and full year earnings for their 2019 fiscal year in early February 2020