Wendy’s Q2 Results Top Estimates, Raises Guidance

Wendy’s (WEN) delivered upbeat second-quarter results and raised its 2021 financial outlook. Robust growth in the quarter drove the year-over-year increase in revenue and earnings.

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Revenue was up 22.6% year-over-year to $493.3 million, beating consensus estimates of $461.63 million. The increase was attributed to higher sales at restaurants. Additionally, the company also saw a significant increase in franchise royalty revenue.

Adjusted EBITDA was up 34.5% compared to the same quarter last year to $131.1 million. Furthermore, adjusted EPS was $0.27, an increase of 125% year-over-year, and above analysts’ estimates of $0.18 a share. (See Wendy’s stock charts on TipRanks)

According to CEO Todd Penegor, “Our business momentum, strong partnership and health of our franchisees, and the dedication of our restaurant crew and support center teams reaffirms our confidence that we will achieve our vision of becoming the world’s most thriving and beloved restaurant brand.”

Following the solid second-quarter results, Wendy’s said that it now expects global systemwide sales to grow between 11% and 13% in 2021. Adjusted EBITDA is expected to be between $465 million and $475 million. Furthermore, adjusted earnings per share is likely to range from $0.79 to $0.81 for the year.

Wendy’s has also confirmed a 20% rise in its regular quarterly cash dividend to 12 cents a share. The increase is in response to the strengthening of its liquidity position and momentum growth in the core business. Additionally, it has increased the share repurchase program authorization by $70 million to $220 million.

Yesterday, Truist Financial analyst Jake Bartlett reiterated a Buy rating on WEN and raised the price target to $30 from $28, implying 31.29% upside potential to current levels.

Consensus among analysts is a Moderate Buy based on 13 Buys and 8 Holds. The average Wendy’s price target of $26.61 implies 16.46% upside potential to current levels.