Dine Brands Global Looks Cheaper Than It Really Is

Summary Dine Brands Global is trading on the cheap and its cash flow picture has generally increased in recent years. This comes at a time when the company continues to shrink and as its Applebee's brand experiences particularly poor comparable store sales. Although shares are cheap on an absolute basis, they look more or less fairly valued compared to similar firms and when factoring in its historical performance. Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Learn More »

Two very iconic restaurant chains that exist in the US today are Applebee’s Neighborhood Grill + Bar and International House of Pancakes (aka IHOP). At the center of these two firms is a company called Dine Brands Global (NYSE:DIN). This operator, which owns, franchises, and operates these restaurant concepts, is a rather large player in the food space. However, financial performance achieved by the company has been quite lumpy in recent years. On the positive side, the company is trading at levels that should be considered attractive. But when you consider that there are other players on the market that are likely in better condition than it is, I cannot get all that excited. At the end of the day, I have decided to rate the business a ‘hold’ because while I do not think it is a bad opportunity, I certainly don't think it's great.

A play on dining out

As I mentioned already, Dine Brands Global serves as an owner, franchisor, and operator of both the Applebee's and IHOP restaurant concepts. All combined, the system that the company has consists of 3,426 locations, with most of them located in the domestic market. The vast majority of these locations are currently franchised out. For instance, as of the end of the latest quarter, the company had 1,675 Applebee's restaurants, with only 69 of these being company-owned and operated. Meanwhile, the company's...