• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

Dine Brands, Biglari Holdings Sit at Opposite Ends of the Restaurant Table

Shares of Dine Brands have surged this year after a rough 2017, while Biglari has slid since creating two classes of stock.
By JONATHAN HELLER
Nov 14, 2018 | 12:00 PM EST
Stocks quotes in this article: MCD, YUM, DRI, CMG, DPZ, DIN, BH, CBRL, BH.A

It has been another good year for restaurant stocks, with the "Big Five" -- consisting of McDonald's Corp. (MCD) (up 9% year to date), Yum Brands Inc. (YUM) (up 10%), Darden Restaurants Inc. (DRI) (up 20%), Chipotle Mexican Grill Inc. (CMG) (up 68%) and Domino's Pizza Inc. (DPZ) (up 41%) -- up an average of 30% year to date, handily trouncing the S&P 500 (up 4%). A strong economy has been a friend to the space as consumers are not shy these days about eating outside the home.

The best performer is a bit of a surprise. This time last year, Dine Brands Global Inc. (DIN) , the parent of IHOP and Applebee's, was languishing in the low $40s and was down 40% year to date. Indeed, it was the only restaurant name that qualified for my 2017 tax-loss selling list, the aim of which was to identify stocks already under pressure that investors might dump prior to year-end in order to offset gains. The theory is that once the New Year started, investors potentially would pile into these names.

Dine Brands has worked well to that end and is up 84% year to date. Despite the rise, it still trades at about 13x next year's consensus earnings estimates. DIN has a streak of four consecutive positive earnings surprises, yet it is a bit surprising that just four analysts currently cover the name. One other surprise is that the stock's success comes on the heels of a 35% dividend early this year.

One of the worst performers and biggest disappointments has been Biglari Holdings Inc. (BH) , parent of Steak n Shake and also a huge stakeholder in Cracker Barrel Old Country Store Inc. (CBRL) , owning nearly 20% of the company. Biglari adopted a dual class share structure back in May; its A shares (BH.A) have the voting rights and trade for about five times the B shares, which don't have voting rights; it has been downhill ever since that move. The A shares are down about 29% since the conversion, while B shares have fallen about 40%.

Biglari remains an enigma; its unapologetic management shuns the financial press and it operates in a structure that investors find confusing. Oriented for the long haul and seeking to build a "museum" of businesses, CEO Sardar Biglari is never shy about telling investors that if they are focused on the short term and don't buy into his philosophy they should leave. Of course, all the mystery and apprehension about the way the business is run, and how the CEO is compensated, contribute heavily to the shares' massive discount, which I term the "Biglari discount."

BH's ownership stake in Cracker Barrel, valued at about $800 million alone, greatly eclipses its own market cap of $464 million, and that's without considering the value of Steak n Shake, the small Western Sizzlin' restaurant chain, First Guard Insurance and other assets. In addition, the Cracker Barrel stake has generated an estimated $41 million in dividends to BH in 2018.

Something is desperately wrong with this picture; the discount has grown far too wide, and I remain a long-term embittered shareholder, the ranks of which are likely growing by the day.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller was long DIN and BH.

TAGS: Investing | Stocks | Consumer | Restaurants

More from Stocks

Extra! Extra! All News Is Good News on Wall Street

James "Rev Shark" DePorre
Aug 10, 2022 4:22 PM EDT

The negatives are painfully obvious, but the market is running hot and forcing those who think the action is illogical to add long exposure.

Alphabet: You Can Lead a Stock to 'Water' But You Can't Make It Break Out

Bruce Kamich
Aug 10, 2022 2:49 PM EDT

What's going on here?

I've Got a Play for American Airlines as It Pushes Against Headwinds

Mark Sebastian
Aug 10, 2022 2:24 PM EDT

Here's how I would trade this airline name.

AMC's New Drama Stars an 'APE,' Exuberant CEO, and Bonds ... AMC Bonds

Brad Ginesin
Aug 10, 2022 1:57 PM EDT

Let's see how this story could unfold for investors -- and what strategy might win the happiest ending possible.

The Trade Desk Gaps Higher But What Does That Do to the Charts?

Bruce Kamich
Aug 10, 2022 1:46 PM EDT

Here's what traders who are long from our previous recommendation should consider.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • 01:44 PM EDT STEPHEN GUILFOYLE

    This Holding Lights Up With Strong Earnings

    Check out the latest from TheStreet's Stocks Under...
  • 09:24 AM EDT PETER TCHIR

    Jobs Report Reaction: Incredibly Strong, But Questions to Ask

    An incredibly strong July jobs report. Not only d...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login