LOCO - Denny's: Cheap For A Reason
2024-05-27 07:29:42 ET
Summary
- The value investment philosophy can generate strong returns but carries risks, such as relying too much on a firm's current value and ignoring risk factors.
- Denny's Corporation has seen a decline in the number of locations in operation, leading to a decline in shares and profitability.
- Despite increased cash flows, the long-term outlook for Denny's is uncertain due to the declining location count, making it difficult to justify optimism.
From my experience, adopting a value investment philosophy and appropriately implementing it is the best way to generate strong risk adjusted returns. But this does not mean that the strategy is without risk. There are plenty of pitfalls, one of which is relying too much on a firm's current value and ignoring certain risk factors. An example of this can be seen by looking at my own history regarding restaurant chain Denny's Corporation ( DENN )....
Denny's: Cheap For A Reason