Dine Brands (NYSE:DIN) Downgraded: Analyst Cuts Price Target by 40% Amid Weak Sales

28 February, 2025 | 2 Min Read

tickers: DIN

tickers affected by this

ticker	polarity	why?
DIN	positively	The downgrade and lowered price target for the ticker DIN could potentially lead to a buying opportunity for investors who see the current valuation as attractive, especially if the company can implement effective strategies to reverse the weak same-store sales growth trends. Additionally, if the company can execute on its value-focused strategies more effectively in the future, it could lead to a positive turnaround in investor sentiment and stock performance.

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summary

Dine Brands Downgraded by Analyst Amid Weak Same-Store Sales Growth

Dine Brands Global Inc (DIN) faced a significant setback as Wedbush analyst Nick Setyan downgraded the shares from “Outperform” to “Neutral” and slashed the price target from $47.00 to $28.00. This downgrade comes amidst persistent weak same-store sales (SSS) growth for both Applebee’s and IHOP, two of the company’s flagship brands. The analyst had anticipated that the introduction of the “Really Big Meal Deal” at $9.99 would boost Applebee’s SSS growth. However, the results have been disappointing. Similarly, IHOP’s value-focused strategies have not yielded meaningful improvements in SSS growth. The analyst expressed doubts about the likelihood of a rebound in unit growth trends for both brands. The franchised model of Dine Brands has limited the impact on EBITDA, but a gradual annual decline is now the most likely scenario. This outlook is based on negative low-single-digit annual net unit growth and the current SSS growth trend. The analyst had previously hoped that a drop in interest rates and aggressive value strategies would improve the company’s trajectory, but these factors did not materialize as expected. As a result, significant stock repurchases are no longer seen as a viable catalyst post the mid-2025 refinancing of $594 million due in June 2026. The analyst has lowered the 2025 EPS estimate to $5.83 from $6.18. Despite DIN trading at a discount compared to historical multiples and peers, no positive catalysts are anticipated in the short to mid-term. The price forecast is based on a 5.8x EV/EBITDA multiple on the 2025 EBITDA estimate, reflecting a ~45% discount to DIN’s median 5-year pre-COVID multiple of 10.7x. At the time of reporting, DIN shares were trading lower by 1.70% at $25.38.