Earnings Miss: Denny's Corporation Missed EPS By 36% And Analysts Are Revising Their Forecasts

It's shaping up to be a tough period for Denny's Corporation (NASDAQ:DENN), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$110m, statutory earnings missed forecasts by an incredible 36%, coming in at just US$0.09 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Denny's

Following the latest results, Denny's' eight analysts are now forecasting revenues of US$469.4m in 2024. This would be a modest 2.8% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 20% to US$0.56. In the lead-up to this report, the analysts had been modelling revenues of US$471.1m and earnings per share (EPS) of US$0.63 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$11.07, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Denny's, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$8.50 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Denny's is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.8% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.5% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.7% annually for the foreseeable future. So although Denny's' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Denny's. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$11.07, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Denny's going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 5 warning signs for Denny's (1 is significant!) that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.