Del Frisco’s Restaurant Group (DFRG) vs. Denny’s Corporation (DENN) Head to Head Review

Del Frisco’s Restaurant Group (NASDAQ: DFRG) and Denny’s Corporation (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitabiliy, analyst recommendations, dividends and valuation.

Institutional and Insider Ownership

92.6% of Denny’s Corporation shares are held by institutional investors. 2.7% of Del Frisco’s Restaurant Group shares are held by company insiders. Comparatively, 5.2% of Denny’s Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Del Frisco’s Restaurant Group and Denny’s Corporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Del Frisco’s Restaurant Group	3.73%	7.39%	4.77%
Denny’s Corporation	7.34%	-60.77%	13.43%

Volatility & Risk

Del Frisco’s Restaurant Group has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Denny’s Corporation has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Valuation & Earnings

This table compares Del Frisco’s Restaurant Group and Denny’s Corporation’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Del Frisco’s Restaurant Group	$356.76 million	0.84	$41.74 million	$0.56	25.27
Denny’s Corporation	$519.28 million	1.58	$91.98 million	$0.52	23.46

Denny’s Corporation has higher revenue and earnings than Del Frisco’s Restaurant Group. Denny’s Corporation is trading at a lower price-to-earnings ratio than Del Frisco’s Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Del Frisco’s Restaurant Group and Denny’s Corporation, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Del Frisco’s Restaurant Group	0	3	2	0	2.40
Denny’s Corporation	0	2	1	0	2.33

Del Frisco’s Restaurant Group currently has a consensus price target of $18.75, suggesting a potential upside of 32.51%. Denny’s Corporation has a consensus price target of $12.67, suggesting a potential upside of 3.83%. Given Del Frisco’s Restaurant Group’s stronger consensus rating and higher possible upside, research analysts plainly believe Del Frisco’s Restaurant Group is more favorable than Denny’s Corporation.

Summary

Denny’s Corporation beats Del Frisco’s Restaurant Group on 8 of the 14 factors compared between the two stocks.

Del Frisco’s Restaurant Group Company Profile

Del Frisco’s Restaurant Group, Inc. develops, owns and operates three contemporary, complementary restaurants: Del Frisco’s Double Eagle Steak House (Del Frisco’s), Sullivan’s Steakhouse (Sullivan’s) and Del Frisco’s Grille (the Grille). As of December 27, 2016, the Company operated 53 restaurants in 24 states and the District of Columbia in the United States. The Company’s segments include Del Frisco’s, Sullivan’s and the Grille. Del Frisco’s is a steakhouse concept in the United States. The Del Frisco’s brand’s menu includes the United States Department of Agriculture (USDA) Prime grade, wet-aged steaks hand-cut at the time of order and a range of other offerings, including prime lamb, fresh seafood, and signature side dishes and desserts. Each restaurant has a sommelier to guide diners through a wine list. As of December 27, 2016, the Company operated 12 Del Frisco’s steakhouses in nine states and the District of Columbia. Sullivan’s is a complementary concept to Del Frisco’s.

Denny’s Corporation Company Profile

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.