While experiencing increased volatility over the past 12 months, Dine Brands Global, Inc. (NYSE:DIN) — owner and operator of Appleby’s and IHOP franchises — continues to serve its shareholders with a steady stream of rising share prices.
After reaching its all-time high above $110 in mid-February 2015, the share price lost more than 65% of its value before reaching its five-year low of slightly above $38 in early September 2017. While increased volatility of late is a legitimate concern, the share price’s overall trend has been heading higher steadily since the September 2017 low. Since this five-year low, the share price has already advanced more than 140%.
Furthermore, the share price has more than 33% room on the upside before it reaches the current analysts’ target price of $123. Even reaching the $115 low end of the target price range would mean a 25% capital gain.
The December share price decline drove the 50-day Moving Average (MA) down to the 200-MA level by mid-February. However, the 50-day MA managed to resist dropping below the 200-day MA. Driven by the recovery in early 2019 and the recent boost from a positive financial results report, the 50-day MA started rising again and has increased to 4.1% above the 200-day MA.
After beating earnings estimates in each of the first three quarters, Dine Brands announced on February 22, 2019, estimate-topping results for the fourth quarter 2018 as well. Total revenues of $214 million for the last period of the year were 21% higher than in the same period last year and 8.6% above analysts’ expectations. The $1.70 fourth-quarter adjusted earnings per share (EPS) were similarly 8.3% above the $1.57 EPS expectations. In addition to increased revenues, Dine Brands improved its cost structure to increase its gross margin by six percentage points to nearly 46%.
Total revenues for full-year 2018 rose 3% year over year to $7.6 billion, despite a reduction in the number of Applebee’s locations by more than 5%. The company eliminated 90 underperforming stores in 2018 to create a more profitable portfolio base going forward. Additionally, the company bolstered its share price by repurchasing $7 million worth of its common shares in the last quarter, which brought the total share repurchase amount to nearly $35 million for the full year.
Dine Brands Global, Inc. (NYSE:DIN)
Based in Glendale, California and founded in 1958, Dine Brands Global, Inc., together with its subsidiaries, owns, franchises, operates and rents full-service restaurants in the United States and internationally. It operates in five segments: Applebee’s Franchise Operations, IHOP Franchise Operations, Rental Operations, Financing Operations and Company-Operated Restaurant Operations. As of December 31, 2018, the company had 1,768 Applebee’s franchised restaurants and 1,831 IHOP franchised and area licensed restaurants. In addition to restaurant operations and management, Dine Brands Global also owns and leases restaurant real estate that it leases or subleases to 676 IHOP and one Applebee’s location. Furthermore, the company’s Finance Operations business segment offers financing of franchise fees and equipment leases. Formerly known as DineEquity, Inc., the company changed its name in February 2018 to Dine Brands Global, Inc.
Dine Brands Global saw its share price reverse trend in late 2017 and the price has been rising since then. While fluctuations became more frequent after January 2018, the share price’s overall uptrend continues. After entering the trailing 12-month period on this uptrend, the share price continued to gain and then pulled back to drop to its 52-week low of $62.51 on June 4.
After bottoming out in early June, the share price resumed its fluctuating uptrend and reached nearly $94 before reversing direction and pulling back again along with the entire market in December 2018. While many companies and the overall markets reached their respective one-year lows on December 24, 2018, DIN’s share price reversed trend on the last day of December while still remaining more than 7% above its own 52-week low from June 2018.
However, the share price recovered all December losses in less than 60 days and rose to bump up against the $100 level resistance before reaching its new 52-week high of $99.87 on February 22, 2019. After bouncing off the resistance level, the share price tested the $100 barrier once again on Feb. 28 with a $99.20 closing price and then pulled back to close on March 8, 2019, at $92.
While 11% below the February peak, this closing price was nearly 19% higher than it was one year earlier and 41.6% above the 52-week low closing price in early June 2018. Because the share price was rising to its all-time high in 2015, the current closing price is only 10% higher than it was five years ago.
Dine Brands Global combined its asset appreciation with hefty dividend payouts to serve up a 26.2% total return on shareholders’ investment just in the past 12 months. The share price’s 30-month decline from its all-time peak in 2015 limited total returns to just 9% over the past three years. However, the five-year total return came in at 29%.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.