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The Wendy's Co Class A WEN

Morningstar Rating
$18.24 +0.27 (1.50%)
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Company Report

Wendy's Looks Poised to Defend Status in Burger Field With Digital, Breakfast Pushes

Wendy's is the second-largest QSR burger chain in the US behind wide-moat McDonald's, sporting a value proposition built around fresh and craveable products at competitive price points. The banner has benefited from a resurgence over the last few years, driven by the renewed launch of its breakfast platform, store reimaging, and strong value positioning. Stable same-store sales growth and decent cash-on-cash returns have underpinned mid-single-digit annual US revenue growth since 2018, with the firm prioritizing menu development, augmented digital capabilities, and an uptick in unit growth as its key strategic priorities. We continue to view international expansion as the least likely of the firm's initiatives to bear material fruit, but note that sizable development agreements in Asia-Pacific suggest that the Wendy's brand could prove strong enough to make a small foray into emerging international markets—though we still view success as unlikely in those where both wide-moat McDonald's and Burger King already maintain a strong position.

Price vs Fair Value

WEN is trading at a 143% premium.
Price
$17.97
Fair Value
$31.40
Uncertainty
High
1-Star Price
$75.31
5-Star Price
$17.20
Economic Moat
Mlgs
Capital Allocation
Fhwbyjnb

Bulls Say, Bears Say

Bulls

Wendy's development incentive programs (Groundbreaker, Pacesetter, Built to Suit) should drive an improvement in unit growth for the burger chain.

Bears

Smaller scale than Wendy's closest category competitors renders investments in technology and administrative expenses more difficult to defray.

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News

Trading Information

Previous Close Price
$17.97
Day Range
$17.8018.35
52-Week Range
$15.6222.42
Bid/Ask
$18.11 / $18.26
Market Cap
$3.74 Bil
Volume/Avg
5.1 Mil / 4.0 Mil

Key Statistics

Price/Earnings (Normalized)
18.34
Price/Sales
1.72
Dividend Yield (Trailing)
5.56%
Dividend Yield (Forward)
5.56%
Total Yield
9.91%

Company Profile

The Wendy’s Company is the second-largest burger quick-service restaurant, or QSR, chain in the United States by systemwide sales, with $12.3 billion in 2023, narrowly edging Burger King ($11.5 billion) and clocking in well behind wide-moat McDonald’s ($53.1 billion). After divestitures of Tim Hortons (2006) and Arby’s (2011), the firm manages just the burger banner, generating sales across a footprint that spanned almost 7,157 total stores in 30 countries as of year-end 2023. Wendy’s generates revenue from the sale of hamburgers, chicken sandwiches, salads, and fries throughout its company-owned footprint, through franchise royalty and marketing fund payments remitted by its franchisees, which account for 94% of stores, and through franchise flipping and advisory fees.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Small Core
Total Number of Employees
15,300

Competitors

Valuation

Metric
WEN
PZZA
YUM
Price/Earnings (Normalized)
18.3416.4924.52
Price/Book Value
12.56
Price/Sales
1.720.695.23
Price/Cash Flow
9.679.0221.24
Price/Earnings
WEN
PZZA
YUM

Financial Strength

Metric
WEN
PZZA
YUM
Quick Ratio
1.470.461.13
Current Ratio
2.040.801.49
Interest Coverage
3.293.144.66
Quick Ratio
WEN
PZZA
YUM

Profitability

Metric
WEN
PZZA
YUM
Return on Assets (Normalized)
3.80%10.18%24.93%
Return on Equity (Normalized)
57.16%
Return on Invested Capital (Normalized)
6.43%23.15%56.97%
Return on Assets
WEN
PZZA
YUM
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