DENN
📉 The stock has fallen significantly, around 50%, presenting a potential high-risk, high-reward scenario reminiscent of the 2007-2008 period where it multiplied investor capital significantly.
💰 Despite flat revenues, the company continues to generate free cash flow, although it carries substantial debt (around $400 million enterprise value vs. $174 million market cap) requiring $18 million annually for interest payments.
🤔 The key question is whether Denny’s can turn its business around or if it faces potential bankruptcy, making it a speculative investment requiring careful analysis of its debt and cash flow sustainability.
@bernardodegarcia:
“Denny’s, since we started talking about it, has fallen like 50% easily, but at some point, Denny’s either turns around or goes bankrupt. Yes, it has debt, but it generates cash flow. Now, are we facing an opportunity to buy Denny’s like we bought it in 2007-08? You bought it at these levels, and the damn thing reached $23, meaning you multiplied your capital by 8. This is an investment that, if we read and analyze it calmly, we probably have a great chance of success, saying, ‘Okay, how much do I think Denny’s could be worth in 10 years?’ Imagine, it could multiply by 8 or it could multiply by zero. That is, where is its debt level? But as we analyzed back there, and quite quickly, meaning take these analyses with a grain of salt because, as I say, these platforms sometimes have good things, sometimes bad things, and sometimes they count certain debt they shouldn’t count and vice versa. But well, this is $174 million market cap, super small, $180 million enterprise value, meaning we have practically $400 million of debt, okay? And on the other hand, we see that revenues are a bit flat, but it continues to generate cash flow. Well, you say, you don’t pay… it’s $18 million you have to generate to pay the interest, it’s true, or issue shares, which is not the best time to issue shares, but it’s super curious, right? At least back then, Denny’s was buying back shares.”
Watch the exact part of the video where @bernardodegarcia talks about Denny’s Corporation here:
Watch the video on YouTube
Read more articles analyzing Denny’s Corporation (DENN) at the following link. DENN stock.
