After announcing soft fourth-quarter 2010 results, Denny’s Corporation (DENN) is set to boost investors’ confidence on the stock by initiating a share buyback program.

The board of directors of Denny, America’s leading full-service family restaurant chain, has approved a new share repurchase program worth $6 million. The repurchase will be executed from time to time in the open market as well as in privately-negotiated transactions based on market conditions, stock price and other factors.

The company has completed its prior share buyback authorization of $3 million in November 2010. As of March 30, 2011, Denny had about 98.8 million shares outstanding.

We appreciate Denny’s effort to bolster long-term shareholder value. We believe that an increase in share buy back authorization affirms the company’s optimistic outlook and reflects strong growth going forward.

One of its competitors Yum! Brands Inc.(YUM) also authorized a stock repchase plan of up to an additional $750 milliourn in January 2011. The company remains committed to enhancing shareholder value and return cash to shareholders through share repurchases or dividends.

Over the past two years, the company remained focused on lowering its debt burden and has reduced its long-term debt excluding current lease obligation by $15.0 million in 2010. During the fourth quarter, Spartanburg, a South Carolina-based company also refinanced its $300 million debt to a lower cost facility.

Denny’s is also focused on a franchise-driven operating model and its Franchise Growth Initiative continues to convert company-owned stores to franchisees and spur additional unit growth. Through the initiative, the company’s 86% restaurants are now franchised and it targets to achieve 90% of the same in the long run. 

Currently, we maintain our long-term ‘Neutral’ recommendation on the stock. Moreover, Denny’s holds a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating.

 
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