What Happened?
A number of stocks fell in the afternoon session after a report showed U.S. consumer confidence unexpectedly fell for a second straight month to a five-month low.
This downturn reflects growing pessimism among Americans about inflation and a weakening job market. Consumer confidence is a closely watched economic indicator as it gauges households' willingness to spend. A decline suggests that consumers may pull back on discretionary purchases, such as dining out, which could negatively impact the future revenues and profits of companies in the sector.
Compounding the issue, market volatility has increased as a partisan standoff pushes the federal government closer to a shutdown. This prospect has weighed on investor sentiment, creating a 'risk-off' mood in the markets as traders brace for potential economic disruption.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Sit-Down Dining company The ONE Group (NASDAQ: STKS) fell 3.5%. Is now the time to buy The ONE Group? Access our full analysis report here, it’s free.
- Sit-Down Dining company Brinker International (NYSE: EAT) fell 5.9%. Is now the time to buy Brinker International? Access our full analysis report here, it’s free.
- Sit-Down Dining company Denny's (NASDAQ: DENN) fell 6.9%. Is now the time to buy Denny's? Access our full analysis report here, it’s free.
- Sit-Down Dining company Bloomin' Brands (NASDAQ: BLMN) fell 3.3%. Is now the time to buy Bloomin' Brands? Access our full analysis report here, it’s free.
- Sit-Down Dining company Kura Sushi (NASDAQ: KRUS) fell 4.5%. Is now the time to buy Kura Sushi? Access our full analysis report here, it’s free.
Zooming In On Denny's (DENN)
Denny’s shares are extremely volatile and have had 40 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 22 days ago when the stock gained 5.9% on the news that the company announced plans for a massive expansion across the UK.
The move follows the success of its first UK restaurant in Swansea, which opened eight years ago as a "proof-of-concept" location. This single diner serves over 13,500 customers annually and has generated "strong margins," demonstrating the brand's potential. The company's UK franchise holder is now collaborating with FRP Corporate Finance to find partners to acquire the restaurant's brand rights on British soil. The expansion strategy targets high-traffic areas like high streets, airports, and service stations, with potential for new models including drive-thrus, signaling a significant growth opportunity for the company.
Denny's is down 13.7% since the beginning of the year, and at $5.41 per share, it is trading 26.8% below its 52-week high of $7.39 from November 2024. Investors who bought $1,000 worth of Denny’s shares 5 years ago would now be looking at an investment worth $541.
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