Momentum is going at backwards at the Applebee's chain, which reported a 5.2% decline in same-restaurant sales in Q3 and has been in negative comp territory for five straight quarters. There's a thought that the chain has oversaturated the market and is getting a bit stale.
IHOP hasn't been able to offset the Applebee's weakness and is facing wage pressure.
A significant turnaround by the company could be difficult due to its asset-light model of a high mix of franchised locations.
DineEquity trade at 10.5X EV/EBITDA vs. the industry average of 8X-9X. The dividend yield of 4.67% is likely providing some support.
The restaurant stock is not closely followed on Wall Street (4 Buys, 0 Holds or Sells) which could mean the Q4 consensus estimates are a bit too rosy.
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