Denny's Corporation (NDAQ:DENN) may quickly become yet another activist target after a hedge fund disclosed a large stake and indicated it would like to have a talk with management, according to a Schedule 13D filing with the SEC. Shareholders are hoping that strong quarterly results earlier this month coupled with activist involvement will help reignite the struggling restaurant chain.

Olstein Capital Management, who owns a 9.5% stake in the company, indicated their belief that the stock is undervalued and that steps should be taken to increase the market valuation. To this end, Olstein plans to communicate with the company on alternatives for realizing the unrecognized value and provide suggestions for improving the company's financial strength.

Denny's reported strong earnings earlier this month with same-store sales rising 1.3% on stronger customer spending despite a decline in guest traffic. Income per customer at the casual dining chain increased 6% while guest count fell 4.5%in its 468 company restaurants and 1,071 franchised locations.

Denny's stock remains down over 10% so far in 2007 but has begun to mount a turnaround since September - helped substantially by purchasing by Olstein, which moved up the stock over 10% alone since Friday. Denny's stronger results combined with the involvement of an activist shareholder make DENN a stock worth watching!

Related Companies
IHOP Corp. (IHP)
ELXSI Corp. (ELXS)
Wendy's International (WEN)