Financial Review: Denny’s Corporation (NASDAQ:DENN) vs. Biglari Holdings (BH)

Biglari Holdings (NYSE: BH) and Denny’s Corporation (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, valuation, dividends, risk and earnings.

Insider & Institutional Ownership

89.0% of Biglari Holdings shares are owned by institutional investors. Comparatively, 92.5% of Denny’s Corporation shares are owned by institutional investors. 51.2% of Biglari Holdings shares are owned by company insiders. Comparatively, 5.2% of Denny’s Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Biglari Holdings has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500. Comparatively, Denny’s Corporation has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Biglari Holdings and Denny’s Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Biglari Holdings 0 1 0 0 2.00
Denny’s Corporation 0 2 1 0 2.33

Denny’s Corporation has a consensus price target of $12.67, indicating a potential upside of 7.80%. Given Denny’s Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Denny’s Corporation is more favorable than Biglari Holdings.

Profitability

This table compares Biglari Holdings and Denny’s Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Biglari Holdings 1.92% 3.15% 1.52%
Denny’s Corporation 7.34% -60.77% 13.43%

Earnings & Valuation

This table compares Biglari Holdings and Denny’s Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Biglari Holdings $839.07 million 0.75 $43.14 million $12.92 23.68
Denny’s Corporation $519.28 million 1.52 $91.98 million $0.52 22.60

Denny’s Corporation has higher revenue, but lower earnings than Biglari Holdings. Denny’s Corporation is trading at a lower price-to-earnings ratio than Biglari Holdings, indicating that it is currently the more affordable of the two stocks.

Summary

Denny’s Corporation beats Biglari Holdings on 9 of the 14 factors compared between the two stocks.

About Biglari Holdings

Biglari Holdings Inc. is a holding company owning subsidiaries engaged in various business activities, including media, property and casualty insurance, and restaurants The Company’s segments include Restaurant Operations, First Guard, Maxim, Other and Corporate. The Company’s restaurant operations’ activities are conducted through approximately two restaurant concepts operated by subsidiaries Steak n Shake Inc. (Steak n Shake) and Western Sizzlin Corporation (Western). Steak n Shake is engaged in the ownership, operation and franchising of Steak n Shake restaurants. Western is engaged primarily in the franchising of restaurants. The Company’s insurance business consists of First Guard Insurance Company and its agency, 1st Guard Corporation. First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and non-trucking liability insurance to truckers. Its media business consists of Maxim. Maxim’s business lies principally in media and licensing.

About Denny’s Corporation

Denny’s Corporation (Denny’s) operates a franchised full-service restaurant chain. The Company, through its subsidiary, Denny’s, Inc., owns and operates the Denny’s brand. As of December 28, 2016, the Denny’s brand consisted of 1,733 franchised, licensed and Company-operated restaurants around the world, including 1,610 restaurants in the United States and 123 international locations. As of December 28, 2016, 1,564 of its restaurants were franchised or licensed and 169 were Company-operated. In addition to its breakfast-all-day items, Denny’s offers a selection of lunch and dinner items, including burgers, sandwiches, salads and skillet entrees, along with an assortment of beverages, appetizers and desserts. The Company’s Fit Fare menu helps its guests identify items suited to their dietary needs. Most Denny’s restaurants offer special items for children and seniors. The Company has restaurant locations within travel centers, primarily with Pilot and Pilot Flying J Travel Centers.

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