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DineEquity Upped to Strong Buy

Zacks Equity Research

Zacks Investment Research upgraded DineEquity Inc (NYSE:DIN) to a Zacks Rank #1 (Strong Buy) on Jan 18. The company’s focus towards providing healthy food items to its customers and continued expansion plan has led to the upgrade.

Why the Upgrade?

On Jan 10, Glendale, CA-based restaurateur DineEquity’s subsidiary Applebee’s added 26 healthy food items including entrees, sides, beverages and meals for children to provide more nutritional products.

Of late, U.S. eateries are serving a healthy menu, to cater to consumer preference for fresh, organic, nutritious and low-calorie food. Rising health concerns and increasing awareness about obesity and related diseases have led to the shift in consumer’s preference toward healthy and “good for you” products.

Applebee’s is consistently trying to expand its platter of low-calorie foods. Since 2008, the company has been providing Unbelievably Great Tasting & Under 550 Calories foods. Applebee’s has already tested these 26 items in all of its restaurants which resulted in a significant drop in the ordering of french fries. Therefore, the introduction of these low-calorie food items is expected to gain huge popularity, going forward.

Besides, the company is also on an expansion spree. DineEquity unveiled its first IHOP restaurant in Jeddah, Saudi Arabia on Dec 14, in association with franchise operator M.H. Alshaya Co. Other IHOP restaurants opened with Alshaya are located in Kuwait and the United Arab Emirates. In fact, with the help of Alshaya, DineEquity intends to develop 40 restaurants across the Middle East and North Africa, with plans to expand to Lebanon, Qatar, Oman, Bahrain and Egypt.

DineEquity, through its subsidiaries and franchises, operates restaurants under the Applebee's Neighborhood Grill & Bar and IHOP Restaurant brands. It reported strong third quarter 2013 results on Oct 29, where both earnings and revenues beat the Zacks Consensus Estimate by 20.9% and 2.3%, respectively.

Other Stocks to Consider

Other restaurateurs worth considering include Fiesta Restaurant Group, Inc. (NASD:FRGI) and Jack In The Box (NASD:JACK), both sporting a Zacks Rank #1. The Cheesecake Factory Inc (NASD:CAKE) holds a Zacks Rank #2 (Buy).

Read the Full Research Report on CAKE
Read the Full Research Report on JACK
Read the Full Research Report on DIN
Read the Full Research Report on FRGI

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