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Dine Brands Global: Pricing In A Post-Pandemic Recovery For Restaurants

Mar. 05, 2021 9:39 AM ETDine Brands Global, Inc. (DIN)


  • Dine Brands Global reported its Q4 earnings which remained impacted by COVID disruptions including new restrictions on indoor dining at the end of the quarter during December.
  • Management highlights nearly all restaurants are now reopened and there is an expectation for sales to begin recovering.
  • The company across the Applebee's and IHOP brands are well-positioned to benefit as the pandemic ends supporting higher earnings growth.
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Dine Brands Global Inc (NYSE:DIN) is the holding company that owns and franchises over 3,500 "Applebee's" and "IHOP" restaurants in the United States. This is a market segment that has been particularly disrupted during the pandemic given the combination of social distancing requirements and local government restrictions against indoor dining limiting customer traffic. The company just reported its latest quarterly result highlighted by ongoing challenges with weak sales although some encouraging signs suggest conditions are improving. Indeed, shares of DIN are up over 40% in 2021 supported by an expectation that the pandemic will end allowing operations to normalize and the company to reclaim its growth trajectory. While we expect more modest gains in the stock from the current level, we believe the outlook is positive and DIN brands can emerge stronger into an industry recovery.

(Seeking Alpha)

DIN Earnings Recap

Dine Brands Global reported its fiscal 2021 Q4 earnings on March 2nd with non-GAAP EPS of $0.39, which missed expectations by $0.27. A GAAP EPS loss of -$0.10 was also below estimates. Revenue of $196 million in the quarter represented a decline of 13.8% year over year although $3.5 million above the consensus.

There wasn't much of a surprise in terms of the headline weakness given the circumstances surrounding the pandemic. For the full year, the revenue of $689 million was down 24% compared to 2019. Keep in mind here that the revenue for the company includes the small number of corporate-owned locations while the majority of the business is based on royalties and franchise fees. Favorably, the company was able to remain cash flow positive generating $107 million in free cash flow as it pulled back on advertising while benefiting from other cost-savings measures. 2020 positive adjusted EPS of $1.79 was down from $6.95 in 2019

(source: Company

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This article was written by

Dan Victor, CFA profile picture
Expert market insight that gets the direction right

BOOX Research is now Dan Victor, CFA

15 years of professional experience in capital markets and investment management at major financial institutions.

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