Wendy’s Drops 5.5% After 4Q Earnings Miss Analysts’ Estimates

Wendy’s reported lower-than-expected fiscal 4Q results. Shares of the fast-food chain rose 1% in Wednesday’s extended trading session after closing 5.5% lower on the day.

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Wendy’s (WEN) 4Q adjusted earnings of $0.17 per share missed Street estimates by $0.01. Adjusted revenues of $382.1 million came in lower than the consensus estimate of $476.39 million.

Nonetheless, the company’s top and bottom lines marked year-over-year improvements of 11.8% and 112.5%, respectively. The year-over-year growth reflects an increase in same-restaurant sales, and an extra reporting week during the quarter.

The company’s global systemwide sales growth came in at 13.2% in the quarter, while global same-restaurant sales growth was 4.7%. Adjusted EBITDA was $114.5 million, up 37.3%.

For fiscal 2021, Wendy’s expects global systemwide sales growth to be 6-8%. Adjusted EBITDA is anticipated to be between $445 million and $455 million, while adjusted EPS is projected to be in the range of $0.67 to $0.69. (See Wendy’s stock analysis).

Wendy’s CEO Todd Penegor said, “As we turn the page to 2021, we remain confident in our playbook of investing smartly to drive accelerated growth behind our three major long-term growth pillars: significantly building our breakfast daypart, accelerating our digital business, and expanding our footprint, both Internationally and in the U.S.”

Following the 4Q results, Oppenheimer analyst Brian Bittner reiterated a Hold rating on the stock as the analyst is looking “for an opportunity to get bullish again.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 analysts suggesting a Buy and 7 analysts recommending a Hold. The average analyst price target of $24.20 implies about 21% upside potential to current levels. Shares have increased more than 4% over the past year.

Wendy’s scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.