Wendy’s (NASDAQ:WEN) Releases Quarterly Earnings Results, Beats Expectations By $0.04 EPS

Wendy’s (NASDAQ:WEN) issued its quarterly earnings data on Thursday. The restaurant operator reported $0.13 EPS for the quarter, topping analysts’ consensus estimates of $0.09 by $0.04, FiscalAI reports. Wendy’s had a return on equity of 115.31% and a net margin of 5.72%. The firm had revenue of $435.62 million during the quarter, compared to analyst estimates of $531.28 million. During the same period in the previous year, the company posted $0.24 EPS. The company’s revenue for the quarter was down .5% on a year-over-year basis.

Here are the key takeaways from Wendy’s’ conference call:

• U.S. same-restaurant sales fell 5.7% in Q3, with traffic down 11.9%; adjusted EBITDA declined $24.6 million year over year to $113.4 million. Sales trends improved 130 basis points sequentially, but management said results remain unsatisfactory.
• Wendy’s made breakfast optional for U.S. restaurants, saying franchisees can exit unprofitable locations and focus resources on other dayparts. The company estimates the change could add up to $200 million in restaurant-level EBITDA across company and franchise restaurants.
• Delivery tests generated low-double-digit to 20% sales lifts, and more than 90% of U.S. franchise restaurants are now participating in delivery promotions. Management also cited early improvement in sales trends during Q3 and into Q4, while cautioning that the turnaround is still in its early stages.
• International systemwide sales grew 3.5%, with 30 new restaurants opened in Q3 and 84 opened year to date through the quarter. Management highlighted continued international development opportunities, while noting same-restaurant sales weakness in Canada.
• Wendy’s ended the quarter with about $413 million in cash and net debt leverage of 5.2x, and expects leverage to remain elevated in the near term. Free cash flow through the first three quarters was $174.2 million, down $21.4 million year over year.

Wendy’s Price Performance

NASDAQ WEN opened at $8.15 on Friday. Wendy’s has a 12-month low of $5.94 and a 12-month high of $10.12. The company has a 50 day moving average price of $6.95 and a two-hundred day moving average price of $7.36. The stock has a market capitalization of $1.55 billion, a PE ratio of 15.98, a price-to-earnings-growth ratio of 1.33 and a beta of 0.37. The company has a quick ratio of 1.88, a current ratio of 1.90 and a debt-to-equity ratio of 27.95.

Wendy’s Dividend Announcement

The firm also recently announced a quarterly dividend, which will be paid on Tuesday, December 15th. Stockholders of record on Tuesday, December 1st will be issued a $0.07 dividend. The ex-dividend date is Tuesday, December 1st. This represents a $0.28 dividend on an annualized basis and a dividend yield of 3.4%. Wendy’s’s dividend payout ratio is presently 42.42%.

Trending Headlines about Wendy’s

Here are the key news stories impacting Wendy’s this week:

• Positive Sentiment: Wendy’s reported third-quarter adjusted earnings of $0.13 per share, above analysts’ estimates, and launched its multi-year “Dave’s Way” plan to improve traffic, market share and restaurant profitability. Quarterly results and strategy
• Positive Sentiment: The company is refreshing its menu for 2027 and tailoring breakfast offerings by location after tests found that scaling back breakfast in some locations improved profitability. These moves could help the turnaround if they attract customers and lift margins. Menu refresh
• Positive Sentiment: Wendy’s is considering acquiring as many as 163 Meritage Hospitality Group restaurants, which could give it more control over locations and support its franchise portfolio strategy, though the deal is not final. Potential restaurant acquisition
• Neutral Sentiment: Citigroup and Stephens raised their price targets to $8, while keeping neutral and equal-weight ratings, respectively. Both targets are slightly below the cited share price, suggesting limited near-term upside in their views.
• Negative Sentiment: Despite the earnings beat, quarterly earnings were below the year-ago level and revenue declined year over year, underscoring the traffic and sales challenges the turnaround must address.
• Negative Sentiment: The board rejected Trian’s $7.35-per-share buyout proposal as undervaluing Wendy’s and adopted a limited-duration “poison pill.” The offer was below the cited recent share price, but blocking it leaves investors reliant on management’s turnaround and may prolong activist-related uncertainty. Buyout proposal rejection

Analyst Upgrades and Downgrades

A number of research firms have commented on WEN. Seaport Research Partners began coverage on Wendy’s in a research note on Wednesday, September 16th. They issued a “neutral” rating for the company. KeyCorp reiterated a “sector weight” rating on shares of Wendy’s in a research note on Tuesday, August 11th. TD Cowen reaffirmed a “hold” rating and set a $6.00 target price on shares of Wendy’s in a research report on Wednesday, October 28th. Morgan Stanley set a $5.50 price target on Wendy’s in a research note on Monday, August 10th. Finally, Stephens lifted their price target on Wendy’s from $7.00 to $8.00 and gave the stock an “equal weight” rating in a report on Friday. One research analyst has rated the stock with a Buy rating, eleven have issued a Hold rating and six have given a Sell rating to the company’s stock. According to data from MarketBeat, the company presently has a consensus rating of “Reduce” and a consensus target price of $7.56.

Wendy’s Company Profile

The Wendy’s Company (NASDAQ: WEN) operates and franchises quick-service restaurants under the Wendy’s brand. Its restaurants are known for hamburgers made with fresh, never-frozen beef, along with chicken sandwiches, salads, fries, breakfast items, desserts, and beverages.

Founded by Dave Thomas in 1969, Wendy’s has grown into an international restaurant chain with locations primarily in the United States and Canada, as well as select markets in other countries. The company’s restaurant system includes both company-operated and franchised locations.

In addition to its restaurant operations, Wendy’s supports customers through digital ordering, delivery, loyalty programs, and mobile applications.