The Wendy's Company (WEN – Analyst Report) 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. The system optimization initiative is aimed at changing the business to a franchise-based model. Though the reduction in ownership is currently weighing on near-term revenues, franchising a large chunk of its system is helping to lower overhead expenses.
Investors should also note the recent earnings estimate revisions for WEN, as the consensus estimate has mostly remained stable. Meanwhile, WEN's earnings have been mixed over the past few quarters. Wendy's has missed earnings in one of the trailing four quarters, has remained in-line in two of the quarters and has posted a positive surprise in the other quarter. Meanwhile, revenues have missed in three of the trailing four quarters while beating the same in rest of the quarters.
Currently, WEN has a Zacks Rank #3 (Hold) but that could change following Wendy's earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: WEN misses on earnings. Our consensus earnings estimate called for EPS of 9 cents share, and the company reported EPS of 8 cents. Investors should note that these figures take out stock option expenses.
Revenues: WEN reported revenues of $489.5 million. This beat our consensus estimate of 489 billion.
Key Stats to Note: Systemwide comps increased 2.2% during the quarter. Comps at North America company-operated restaurants increased 2.4% in the reported quarter while comps at North American franchise-operated restaurants increased 2.2%.
Wendy's expects 2015 adjusted earnings per share in the range of 31 cents to 33 cents per share. The company expects same-restaurant sales at company-operated restaurants to be 2%-2.5%.
The company is also increasing its 2015 outlook for restaurant operating margins and expects it to be in the range of 17% to 17.5%, an improvement of around 120 to 170 basis points compared to 15.8% in 2014. This estimate includes an improved outlook for commodity costs. The company now expects its commodity costs to be approximately flat compared to 2014.
