What Happened?

Shares of diner restaurant chain Denny’s (NASDAQ:DENN) jumped 6.7% in the morning session after Citi analyst upgraded the stock's rating from Neutral to Buy, citing "accelerated store closures, greater discipline at the cost level, and a clearer view of the KeKe's growth plans." After the initial pop the shares cooled down to $6.51, up 4.1% from previous close.

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What The Market Is Telling Us

Denny’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 3 days ago when the stock dropped 17.6% on the news that the company reported weak third-quarter earnings results, with revenue, adjusted EPS, and EBITDA falling short of Wall Street's estimates. Guidance was also weak, with EBITDA guidance for the full year falling below consensus estimates. Management doesn't expect material improvement in the consumer and economic environment and continued to close restaurants with low volumes. Overall, this was a softer quarter.

Denny's is down 39.8% since the beginning of the year, and at $6.51 per share, it is trading 41.6% below its 52-week high of $11.14 from January 2024. Investors who bought $1,000 worth of Denny’s shares 5 years ago would now be looking at an investment worth $303.02.

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