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Wendy's (WEN)
NASDAQ:WEN
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Wendy's
(NASDAQ:WEN)66Neutral
Positive Factors
Leadership
A new results-driven CEO, Kirk Tanner, brings considerable experience from PepsiCo, which could positively influence the company's direction.
Stock Valuation
The company's valuation is relatively unassuming, trading at less than 10 times the estimated EBITDA for 2025, which is favorable compared to the mid-to-high teens for global quick-service restaurants.
Negative Factors
Competitive Pressure
Market share losses by Wendy’s recently and potential competitive pressure from McDonald’s are noted challenges.
Wendy's (WEN) vs. S&P 500 (SPY)
Market Cap
$2.99B
Dividend Yield6.7%
Average Volume (3M)5.83M
Price to Earnings (P/E)15.8
Beta (1Y)0.20
Revenue Growth2.98%
EPS Growth-2.58%
CountryUS
Employees15,300
SectorConsumer Cyclical
Sector Strength53
IndustryRestaurants & Bars
Share Statistics
EPS (TTM)0.94
Shares Outstanding200,485,060
10 Day Avg. Volume6,938,333
30 Day Avg. Volume5,828,835
Financial Highlights & Ratios
PEG Ratio35.93
Price to Book (P/B)N/A
Price to Sales (P/S)1.33
Price to Cash Flow (P/CF)10.90
P/FCF Ratio8.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$17.25Price Target Upside15.38% Upside
Rating ConsensusHold
Number of Analyst Covering22
Wendy's Business Overview & Revenue Model
Company DescriptionThe Wendy's Co. engages in operating, developing, and franchising a system of quick-service restaurants. It offers hamburgers and related products, such as chicken breast sandwiches, nuggets, chili, and baked potatoes, French fries, freshly prepared salads, soft drinks, milk, coffee, frosty deserts and kid's meals. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.
How the Company Makes MoneyWendy's generates revenue primarily through its company-operated restaurants and franchise operations. The company earns money from sales at its directly owned locations, which account for a portion of its total revenue. A significant part of Wendy's income also comes from franchise fees and royalties, as the majority of its restaurants are franchised. These fees typically include initial franchise fees, ongoing royalties based on a percentage of sales, and revenue from leasing properties to franchisees. Additionally, Wendy's benefits from strategic partnerships and marketing initiatives that enhance brand visibility and drive sales across its global network.
Wendy's Financial Statement Overview
Summary
Wendy's financials depict a company navigating a challenging environment with stable revenue but pressure on operational efficiency as seen in negative EBIT. The high leverage is a concern, though cash flow remains a strong point, ensuring liquidity and operational funding. The company should focus on improving operational margins and reducing debt reliance to enhance financial stability.Income Statement
Wendy's shows a mixed income statement performance. The gross profit margin has been consistent, indicating stable cost management. However, recent negative EBIT suggests challenges in operational efficiency, although EBITDA remains positive, showing potential to cover operational costs. Revenue growth has been modest, with some fluctuations, impacting net profit margins adversely in the latest period.65
Positive
Balance Sheet
Wendy's balance sheet highlights a high debt-to-equity ratio, raising concerns about financial leverage and potential risk in downturns. The equity ratio is low, indicating reliance on debt for asset financing. Return on Equity is volatile due to fluctuating net income and changes in shareholder equity, reflecting the impact of financial and operational decisions over time.55
Neutral
Cash Flow
The cash flow statement shows strong operating cash flow relative to net income, indicating effective cash generation. Free cash flow has been stable, allowing for potential reinvestment or debt reduction. However, fluctuations in free cash flow growth suggest variability in capital expenditures or operational cash flow optimization.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 925.90M | 2.18B | 2.10B | 1.90B | 1.73B | Gross Profit |
| 142.69M | 776.47M | 720.76M | 698.26M | 621.48M | EBIT |
| -11.51M | 381.98M | 353.31M | 366.96M | 269.31M | EBITDA |
| 135.65M | 552.05M | 535.55M | 458.55M | 416.91M | Net Income Common Stockholders |
| 194.36M | 204.44M | 177.37M | 200.39M | 117.83M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 450.51M | 516.04M | 745.89M | 249.44M | 306.99M | Total Assets |
| 5.03B | 5.18B | 5.50B | 5.10B | 5.04B | Total Debt |
| 4.09B | 4.14B | 4.28B | 3.86B | 3.68B | Net Debt |
| 3.64B | 3.62B | 3.54B | 3.61B | 3.37B | Total Liabilities |
| 4.78B | 4.87B | 5.03B | 4.66B | 4.49B | Stockholders Equity |
| 259.35M | 309.78M | 465.72M | 436.40M | 549.60M |
| Cash Flow | Free Cash Flow | |||
| 260.92M | 260.39M | 174.36M | 267.79M | 215.39M | Operating Cash Flow |
| 355.31M | 345.42M | 259.90M | 345.77M | 284.36M | Investing Cash Flow |
| -129.31M | -86.55M | -77.78M | -154.67M | -68.25M | Financing Cash Flow |
| -303.10M | -504.30M | 288.67M | -242.74M | -157.91M |
Wendy's Technical Analysis
Negative
14.95
Price Trends
15.00
Negative
16.56
Negative
16.47
Negative
Market Momentum
0.06
Negative
49.70
Neutral
8.21
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WEN, the sentiment is Negative. The current price of 14.95 is above the 20-day moving average (MA) of 14.82, below the 50-day MA of 15.00, and below the 200-day MA of 16.47, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 49.70 is Neutral, neither overbought nor oversold. The STOCH value of 8.21 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WEN.
Wendy's Risk Analysis
Wendy's disclosed 36 risk factors in its most recent earnings report. Wendy's reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Wendy's Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $218.46B | 26.84 | -216.57% | 2.22% | 1.67% | -1.61% | |
75 Outperform | $44.21B | 30.38 | -19.43% | 1.72% | 6.68% | -7.09% | |
68 Neutral | $4.37B | 426.31 | 2.17% | ― | 15.18% | -48.78% | |
66 Neutral | $2.99B | 15.79 | 74.94% | 6.70% | 2.98% | -2.58% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
56 Neutral | $1.03B | 337.43 | 0.27% | 2.32% | -1.23% | ― |
* Consumer Cyclical Sector Average
Performance Comparison
WEN
Wendy's
14.95
-2.62
-14.91%
MCD
McDonald's
307.45
21.47
7.51%
YUM
Yum! Brands
159.37
22.51
16.45%
QSR
Restaurant Brands International
66.64
-11.98
-15.24%
SHAK
Shake Shack
99.13
-1.83
-1.81%
DNUT
Krispy Kreme
5.96
-6.60
-52.55%
Wendy's Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: 6.86% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view of the company's performance. While there were significant achievements in global sales growth, digital expansion, and innovative collaborations, challenges such as the closure of underperforming restaurants and a reduced dividend were also highlighted. The sentiment reflects a cautious optimism with a focus on strategic growth and operational improvements.Highlights
Strong Global Sales Growth
Global system-wide sales increased over 5% in Q4 2024, with same-restaurant sales growing over 4%. Internationally, there was an 11% system-wide sales growth on a constant currency basis.
Digital and Loyalty Program Expansion
Global digital sales grew nearly 40% year-over-year, with loyalty member growth up 25% from a year ago and over 46 million reward members enrolled.
Innovative Menu and Collaborations
Introduction of limited-time offerings like the Salted Caramel Frosty and Mushroom Bacon Cheeseburger, and successful collaborations such as the SpongeBob's 25th anniversary, which drove a 20% lift in same-restaurant sales.
Operational and Technological Advancements
Implementation of digital menu boards at over 300 locations, deployment of voice-enabled AI order taking at nearly 100 locations, and an 80-basis point improvement in restaurant margin.
Lowlights
Closure of Underperforming Restaurants
Closure of underperforming restaurants, which poses a headwind to sales growth in 2025.
Flat Start to 2025 Due to Weather and Traffic Headwinds
The start of 2025 expected to face traffic headwinds exacerbated by significant weather events, with Q1 expected to be the lowest point for same-restaurant sales.
Dividend Cut
Decision to right-size the quarterly dividend payment, reducing the dividend from $0.25 per share to $0.14 per share starting in the second quarter of 2025.
Company Guidance
During The Wendy's Company fiscal 2024 fourth-quarter earnings call, the company reported several key performance metrics and provided guidance for 2025. In Q4 2024, global system-wide sales increased by over 5%, with same-restaurant sales growing by over 4%. The U.S. market saw traffic and dollar growth surpassing the QSR burger category, largely driven by a successful collaboration with Paramount for SpongeBob's 25th anniversary, which at its peak, led to a 20% increase in same-restaurant sales. Internationally, system-wide sales grew 11% on a constant currency basis, driven by strong net unit growth, while digital mix increased by 130 basis points to 19% globally. For 2025, Wendy's plans to drive global system-wide sales growth of 2% to 3% and aims for net unit growth of 2% to 3%, marking its highest rate in over 15 years. The company also reported that adjusted EBITDA grew by 8.6% to $137.5 million in Q4 2024. Wendy's plans to increase investments in technology and unit development, supported by a revised capital allocation strategy, which includes a new target dividend payout ratio of 50% to 60% of adjusted earnings and up to $200 million in share repurchases for 2025.Wendy's Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Wendy’s Appoints Ken Cook as New CFO
Positive
Nov 18, 2024
The Wendy’s Company has announced the appointment of Ken Cook as its new Chief Financial Officer, effective December 2, 2024. With a robust 20-year background at UPS, Cook is set to enhance Wendy’s growth trajectory by driving operational performance and boosting restaurant profitability. This transition marks a significant step as Wendy’s aims to unlock shareholder value and expand globally, following the contributions of outgoing CFO Gunther Plosch.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.