What happened

Shares of Dine Brands Global (NYSE:DIN), formerly known as DineEquity, jumped on Tuesday after the restaurant company reported its fourth-quarter results. Dine Brands beat expectations for both revenue and earnings, and the comparable-sales picture for its Applebee's and IHOP brands looked far less dire than in previous quarters. As of 11:15 a.m. EST, the stock was up about 17.5%.

So what

Dine Brands reported fourth-quarter revenue of $148.8 million, down 3.5% year over year but about $0.8 million higher than the average analyst estimate. Domestic systemwide comparable sales at Applebee's rose 1.3% during the quarter, a far better result than the 5.3% decline for the full year. IHOP suffered a 0.4% decline in the same measure, but that was also an improvement from a 1.9% full-year decline.

A shrimp entree from Applebee's on a table next to a small wine decanter, a glass of wine, and a napkin.

Image source: Dine Brands Global.

Non-GAAP earnings per share came in at $0.74, down from $1.37 in the prior-year period but $0.05 better than analysts were expecting. Lower sales combined with higher costs weighed on the bottom line. Against the backdrop of the earnings plunge, Dine Brands announced a dividend cut along with its results. The company now plans to pay a $0.63 per-share quarterly dividend, down from a previous dividend of $0.97 per share. The dividend yield is no longer in the stratosphere, but Dine Brands is still a high-yield stock.

"We believe the change in our quarterly dividend to a more appropriate dividend yield will result in a favorable capital allocation framework and provide us the opportunity for meaningful share repurchases, investments in our brands as well as opportunities to scale our business," said Dine Brands CEO Stephen Joyce.

Now what

Dine Brands expects to produce non-GAAP earnings per share between $4.95 and $5.25 in 2018, up from $4.15 in 2017. The company also sees comparable sales moving in the right direction. Both Applebee's and IHOP are expected to produce domestic systemwide comparable sales growth between 0% and 3% in 2018.

With comparable sales seemingly reaching a bottom, the worst may be over for Dine Brands. A slashed dividend is never good news, but a return to comparable-sales growth and better-than-expected fourth-quarter results are overshadowing that negative. Dine Brands still has plenty of work ahead of it as it continues to resurrect two aging brands, but it's clearly making progress.

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