The Wendy's Company WEN is one of the leading quick-service restaurant companies that serves hamburgers, chicken breast sandwiches and wraps, chicken nuggets, chili, baked and French fried potatoes, freshly prepared salads, soft drinks and Frosty desserts.
The company has been focusing on its system optimization initiative since 2013 to change its business to a franchise-based model. Though transition to a franchise-based business model has been weighing on revenues in the near term, it would lower Wendy’s general and administrative expenses and boost earnings going forward. Meanwhile, sales initiatives like menu innovation, promotional offerings and increased focus on marketing are driving growth.
However, a soft consumer spending environment in the U.S. restaurant space leading to lower traffic and comps remains a cause of concern.
Investors should note that the consensus estimate for WEN has hardly witnessed any significant movement over the last 60 days. Meanwhile, WEN’s earnings have been mostly strong over the past few quarters. In fact, the company posted positive earnings surprises in each of the last four quarters, with an average beat of 29.01%. Revenues too outpaced the Zacks Consensus Estimate in three of the trailing four quarters.
WEN currently has a Zacks Rank #2 (Buy) but that could change following Wendy’s earnings report which was just released. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: WEN beats on earnings. Our consensus earnings estimate called for earnings per share of 10 cents and the company reported earnings of 11 cents per share. Investors should note that these figures take out stock option expenses.
Revenues: WEN reported revenues of $364 million. This surpassed our consensus estimate of $347 million.
Key Stats to Note: Comps at North America system restaurants increased 1.4% in the third-quarter 2016.
Stock Price Impact: In-active in pre-market trading.
Check back for our full write up on this WEN earnings report later!
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