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DineEquity (DIN) Q2 Earnings Meet, Sales Miss, Stock Down

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CA-based restaurant operator DineEquity, Inc. (DIN - Free Report) reported second-quarter 2016 earnings of $1.59 per share, in line with the Zacks Consensus Estimate. Notably, the figure increased 3.9% from the prior-year quarter earnings of $1.53, on the back of lower share count.

Dineequity Inc. (DIN - Free Report) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Total revenue of $160.3 million declined 6.6% year over year due to lower Franchise and restaurant, Rental as well as Financing revenues. Revenues also missed the Zacks Consensus Estimate of $162 million by over 1%.

Notably, the company operates under the Applebee's Neighborhood Grill & Bar and IHOP brands.

DineEquity’s shares declined nearly 5% in yesterday’s trading session due to soft revenues, domestic system-wide comps decline at Applebee as well as lowered 2016 comps guidance for both Applebee and IHOP.

Behind the Headline Numbers

IHOP's domestic system-wide comps increased 0.2% which compared unfavorably with the prior quarter comps growth of 1.5%. Nonetheless, the company hopes to boost the brands’ comps through menu innovation strategy and breakfast inspired food offered throughout the day.

Applebee's domestic system-wide comps declined 4.2%, compared with the prior-quarter comps decline of 3.7%. Notably, Applebee’s casual dining restaurants are facing stiff competition from fast-food and quick service restaurants. Nonetheless, the company is taking steps to revitalize the Applebee brand. Increased focus on food and menu innovation, guest satisfaction and marketing are expected to improve comps over the long term.

2016 Outlook

Notably, in view of the sales performance at Applebee’s and IHOP in the first half of 2016 and given its outlook for the second half, the company lowered its 2016 comps guidance for both the brands.

IHOP's domestic system-wide comps are now expected to range between 0.5% and 2% in 2016, lower than the prior guidance of 1%--4%.

Applebee's domestic system-wide comps are expected to decline 3%--4.5%. This compares unfavorably with the earlier guidance of a negative 2% to positive 2%.

Meanwhile, the company reiterated its capital expenditure outlook at approximately $8 million.

It also reaffirmed its general and administrative expense guidance between $154 million and $158 million, including non-recurring costs related to restaurant support center consolidation.

DINEEQUITY INC Price, Consensus and EPS Surprise

DINEEQUITY INC Price, Consensus and EPS Surprise | DINEEQUITY INC Quote

Zacks Rank & Stocks to Consider

DineEquity has a Zacks Rank #4 (Sell). Better-ranked restaurant stocks are Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , Del Taco Restaurants, Inc. and Papa John's International Inc. (PZZA - Free Report) . While Dave & Buster's Entertainment sports a Zacks Rank #1 (Strong Buy), Del Taco Restaurants and Papa John's International carry a Zacks Rank #2 (Buy).

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