The Wendy's Company ( WEN ) recently reported
its fourth-quarter 2012 adjusted earnings of 9 cents per share,
ahead of the Zacks Consensus Estimate as well as the year-ago
earnings per share of 4 cents.
In 2012, the company's adjusted earnings per share were 17
cents, which was in line with the Zacks Consensus Estimate but
ahead of the year-ago quarter's earnings of 15 cents per share.
Total revenues in the fourth quarter climbed 2.4% annually to
$629.9 million, but fell short of the current Zacks Consensus
Estimate of $638.0 million. The revenues in the quarter have gained
from the company's new acquisitions and unit openings. In 2012,
total revenues increased 3% year over year to nearly $2.51
Wendy's Franchise sales declined 0.8% to nearly $76 million.
Same-store sales at North America Company-operated restaurants
declined 0.2% versus a rise of 5.1% in the year-earlier quarter.
Wendy's North America Franchise same-store sales also declined
Company-operated restaurant margins in the quarter rose 90 basis
points (bps) to 15.9%, driven by increased Image Activation sales
and decreased breakfast advertising expenses, which negated the
adverse impact from commodity cost inflation.
Adjusted EBITDA rose 19% to $95.9 million owing to high
restaurant margin and reduced general and administrative costs.
In the fourth quarter, Wendy's declared to repurchase up to $100
million worth of its common stock through December 29, 2013.
During the quarter, the company hiked its cash dividend by 100%
to 4 cents per share from 2 cents per share paid previously. This
equates to an annual pay out of 16 cents per share.
Moreover, the company has recently declared its quarterly
dividend of 4 cents per share, which will be paid to shareholders
on March 15, 2013, of record as of March 1, 2013.
Wendy's opened 39 franchised and 12 owned restaurants in the
quarter, and shut down 5 company-owned and 29 franchised
restaurants. At the end of the quarter, the company was operating
6,560 restaurants worldwide including 6,186 restaurants in North
Moreover, in 2012 the company purchased 56 franchised
restaurants and sold 30 units to franchisees.
The company maintained its guidance for the full year of 2013.
Wendy's projects that its adjusted earnings will be within 18 cents
- 20 cents per share, up 13%-25% year over year. Management
reiterated its adjusted EBITDA guidance of $350 - $360 million.
The company expects North America company-operated restaurants
same-store sales to increase by 2% - 3%.
Margins at Wendy's are expected to be within 14.2% - 14.5%. The
guidance for margins includes same-store sales as well as Image
Activation growth and favorable cost-effective initiatives, which
are partially offset by increased commodity costs of 90 - 120 basis
points owing to rising beef costs.
Capital expenditure will likely be about $245 million in 2013.
Wendy's plans to revamp 100 franchised as well as 100
company-operated units. Additionally, the company is planning to
spend $10 million to re-image its restaurants.
On the expansion front, management plans to open 25
company-owned and 40 franchise units. The company is also planning
to unveil nearly 60 franchisee and joint-venture outlets overseas.
Further, the company plans to shut down 90 - 100 franchise
restaurants in North America and 15 -20 restaurants overseas. The
company's guidance also includes the revamping of 600 restaurants
Wendy's has outlined a multi-year turnaround plan to improve its
restaurant operating margins, reinvigorate brands, revitalize
same-store sales and expand internationally. The company also
concentrates on enhancing shareholders' value through dividend
distribution. Although Wendy's is striving to stand out by
re-imaging restaurants, upgrading menus, resorting to other
marketing initiatives, and closing underperforming stores, we
believe all its attempts need sometime before they fully pay
Currently, Wendy's retains a Zacks Rank#3 (Hold). Another
restaurateur Red Robin Gourmet Burgers Inc. 's (
RRGB ) adjusted
earnings in the fourth quarter of 2012 was way ahead of the Zacks
Consensus Estimate as well as the year-ago quarter's earnings. Red
Robin Gourmet currently carries a Zacks Rank#1 (Strong Buy).
Other restaurant companies like Krispy Kreme Doughnuts,
Inc. ( KKD
) and Burger King Worldwide, Inc ( BKW ) both with a Zacks
Rank #2 (Buy) are expected to perform well, going ahead.BURGER KING WWD (BKW): Free Stock Analysis
ReportKRISPY KREME (KKD): Free Stock Analysis ReportRED ROBIN GOURM (RRGB): Free Stock Analysis
ReportWENDYS CO/THE (WEN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment