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DineEquity (DIN) Q1 Earnings Top, Sales Lag, Stock Down
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DineEquity, Inc. (DIN - Free Report) reported first-quarter 2017 earnings of $1.22 per share, which surpassed the Zacks Consensus Estimate of $1.20 by 1.7%. However, the figure decreased 22.8% from the prior-year quarter earnings of $1.58. The fall was primarily due to lower gross profit as well as higher general and administrative expenses, partially offset by a lower share count.
Total revenue of $156.2 million declined 4.5% year over year due to lower Franchise and restaurant, Rental as well as Financing revenues. Revenues also missed the Zacks Consensus Estimate of $158.8 million by 1.6%.
Notably, the company operates under the Applebee's Neighborhood Grill & Bar and International House of Pancakes (IHOP) brands.
DineEquity’s shares fell nearly 5% in yesterday’s trading session due to soft revenues given a domestic system-wide comps decline at both IHOP and Applebee’s.
Behind the Headline Numbers
IHOP's domestic system-wide comps declined 1.7%. This compares favorably with the prior-quarter comps decrease of 2.1% but was poor compared with the prior-year quarter comps growth of 1.5%. Notably, after posting 14 consecutive quarters of positive/flat comps, IHOP comps declined consecutively in the last two reported quarters. Nonetheless, the company hopes to boost the brands’ comps through menu innovation, remodeling, focusing on to-go sales and initiatives to improve guest satisfaction.
Applebee's domestic system-wide comps decreased 7.9% comparing unfavorably with the prior-quarter comps decline of 7.2% and the prior-year quarter decline of 3.7%. Notably, Applebee’s casual dining restaurants are facing stiff competition from fast-food and quick service restaurants. Also, consumers are favoring ordering in meals over going to brick-and-mortar retailers. Nonetheless, the company is taking steps to revitalize the Applebee brand. Increased focus on food and culinary innovation, consumer satisfaction and marketing are expected to drive comps over the long term. In fact, over the last two months, the company has begun stabilization work for its Applebee’s business and is working with close franchisee collaboration to improve the brand’s performance.
DineEquity reiterated its previously issued full-year 2017 outlook.
For the full year, it continues to expect Applebee's domestic system-wide comps to decline in the range of 4–8%. IHOP's domestic system-wide comps are expected to be flat to up 3%.
DineEquity expects general and administrative expenses to range between $170 million and $177 million, as announced earlier. The company projected its capital expenditure at approximately $12 million.
Meanwhile, Applebee's franchisees are still projected to develop 20 to 30 new restaurants globally, the majority of which are expected to be international openings. Moreover, the company continues to anticipate the closure of 40 to 60 restaurants, in keeping with its detailed system-wide analysis to optimize the health of the franchisee system.
Zacks Rank & Stocks to Consider
DineEquity carries a Zacks Rank #3 (Hold). Better-ranked stocks in the restaurants space include:
Darden Restaurants, Inc.’s (DRI - Free Report) earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 3.35%. It currently holds a Zacks Rank #2 (Buy).
YUM! China Holdings, Inc. (YUMC - Free Report) is another Zacks Rank #2 company. It has seen current quarter and current-year earnings estimates rise 4.5% and 4.4%, respectively, over the last 30 days.
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Image: Bigstock
DineEquity (DIN) Q1 Earnings Top, Sales Lag, Stock Down
DineEquity, Inc. (DIN - Free Report) reported first-quarter 2017 earnings of $1.22 per share, which surpassed the Zacks Consensus Estimate of $1.20 by 1.7%. However, the figure decreased 22.8% from the prior-year quarter earnings of $1.58. The fall was primarily due to lower gross profit as well as higher general and administrative expenses, partially offset by a lower share count.
Total revenue of $156.2 million declined 4.5% year over year due to lower Franchise and restaurant, Rental as well as Financing revenues. Revenues also missed the Zacks Consensus Estimate of $158.8 million by 1.6%.
Notably, the company operates under the Applebee's Neighborhood Grill & Bar and International House of Pancakes (IHOP) brands.
DineEquity’s shares fell nearly 5% in yesterday’s trading session due to soft revenues given a domestic system-wide comps decline at both IHOP and Applebee’s.
Behind the Headline Numbers
IHOP's domestic system-wide comps declined 1.7%. This compares favorably with the prior-quarter comps decrease of 2.1% but was poor compared with the prior-year quarter comps growth of 1.5%. Notably, after posting 14 consecutive quarters of positive/flat comps, IHOP comps declined consecutively in the last two reported quarters. Nonetheless, the company hopes to boost the brands’ comps through menu innovation, remodeling, focusing on to-go sales and initiatives to improve guest satisfaction.
Applebee's domestic system-wide comps decreased 7.9% comparing unfavorably with the prior-quarter comps decline of 7.2% and the prior-year quarter decline of 3.7%. Notably, Applebee’s casual dining restaurants are facing stiff competition from fast-food and quick service restaurants. Also, consumers are favoring ordering in meals over going to brick-and-mortar retailers. Nonetheless, the company is taking steps to revitalize the Applebee brand. Increased focus on food and culinary innovation, consumer satisfaction and marketing are expected to drive comps over the long term. In fact, over the last two months, the company has begun stabilization work for its Applebee’s business and is working with close franchisee collaboration to improve the brand’s performance.
DineEquity, Inc Price, Consensus and EPS Surprise
DineEquity, Inc Price, Consensus and EPS Surprise | DineEquity, Inc Quote
2017 Outlook
DineEquity reiterated its previously issued full-year 2017 outlook.
For the full year, it continues to expect Applebee's domestic system-wide comps to decline in the range of 4–8%. IHOP's domestic system-wide comps are expected to be flat to up 3%.
DineEquity expects general and administrative expenses to range between $170 million and $177 million, as announced earlier. The company projected its capital expenditure at approximately $12 million.
Meanwhile, Applebee's franchisees are still projected to develop 20 to 30 new restaurants globally, the majority of which are expected to be international openings. Moreover, the company continues to anticipate the closure of 40 to 60 restaurants, in keeping with its detailed system-wide analysis to optimize the health of the franchisee system.
Zacks Rank & Stocks to Consider
DineEquity carries a Zacks Rank #3 (Hold). Better-ranked stocks in the restaurants space include:
Papa Murphy’s Holdings, Inc. (FRSH - Free Report) has seen current year and next year earnings estimates rise 50% and 500%, respectively, in the past two months. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Darden Restaurants, Inc.’s (DRI - Free Report) earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 3.35%. It currently holds a Zacks Rank #2 (Buy).
YUM! China Holdings, Inc. (YUMC - Free Report) is another Zacks Rank #2 company. It has seen current quarter and current-year earnings estimates rise 4.5% and 4.4%, respectively, over the last 30 days.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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