On Jul 9, 2013, Zacks Investment Research upgraded
The Wendy's Co.
) to a Zacks Rank #1 (Strong Buy) based on its upbeat outlook for
the upcoming quarters backed by menu innovation.
Why the Upgrade?
Wendy's has been gaining traction since the beginning of the year
primarily buoyed by its 'Right Price, Right Size Menu'
initiative. Wendy's is now all set for a national rollout of its
new Pretzel Bacon Cheeseburger in the upcoming quarter. The
product has received a favorable response in the test run and is
expected to provide this fast food operator with a shot in the
The company had to resort to a series of initiatives to trigger
comps. Emphasis on value menu as well as premium limited period
offerings are expected to drive results this quarter. Wendy's is
also taking steps to streamline its cost structure. These include
removal of its breakfast operations at certain companies and
franchise restaurants to do away with unprofitable morning
daypart operations. In the upcoming quarters, Wendy's will
benefit from a reduction in beverage costs owing to new
agreements with two of its beverage suppliers.
Management also raised its full year earnings per share guidance
to reflect the net cost savings from debt refinancing that took
place in May 2013. Its adjusted earnings per share are now
expected to be within the range of 20-22 cents per share, up from
the prior expectation of 18-20 cents per share. The new adjusted
earnings per share range represent an 18%-29% year-over-year
Despite a sluggish industry sales environment, the company's
earnings were decent in the first quarter, beating the Zacks
Consensus Estimate and the year-ago earnings by 50%. The
restaurateur is expected to report its second-quarter earnings on
Jul 23, 2013. The Zacks Consensus Estimate for the second quarter
stands at 6 cents per share, which represents about 20% jump in
earnings on year-over-year basis.
Other Stocks to Consider
Some other players which attained Zacks Rank #1 (Strong Buy)
this week include
Krispy Kreme Doughnut Inc.
Starwood Hotels & Resorts Worldwide Inc.
Kite Realty Group Trust
STARWOOD HOTELS (HOT): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
KITE REALTY GRP (KRG): Free Stock Analysis
WENDYS CO/THE (WEN): Free Stock Analysis
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