Why Wendy's Co Popped 14% in November

WEN Chart
WEN Chart

WEN data by YCharts

So what: Wendy's third quarter revenue and earnings both came in ahead of Wall Street expectations, as the fast food chain continues to benefit from its transition to a predominantly franchised model.

Wendy's is also improving the profitability of its restaurants, with restaurant operating margin increasing 330 basis points compared to the year-ago quarter. That has allowed the company to increase the earnings contribution from its company-operated restaurants by 11% year-over-year, even though it owned 153 fewer restaurants relative to last year.

Analysts also like Wendy's new "4 for $4" promotion, which includes a bacon cheeseburger, chicken nuggets, fries, and a drink. RBC Capital says Wendy's value offerings have boosted traffic and should help shield it from competition. Citigroup believes Wendy's 4 for $4 meal is driving accelerated sales growth and expects the promotion to positively impact Wendy's same-store sales by "at least several hundred basis points." And analysts at Wells Fargo expect Wendy's new value-focused menu to help it recapture market share from rival Burger King.

Now what: Based on Wendy's strong operating results so far in 2015, as well as the positive early results from its 4 for $4 promotion, management now expects 2015 same-store sales, adjusted EBITDA, and adjusted earnings to come in at the high end of its guidance.

Wendy's also remains on track to reach its goal of reducing company-owned restaurants to 5% of its total store base by 2016, with management projecting 540 locations will be sold this year and next. The sale of these restaurants should help to further reduce costs and boost companywide margins, while also freeing up more capital that can be returned to shareholders in the form of dividends and share buybacks.

All told, this combination of growth, asset sales, and capital returns makes Wendy's an interesting business in the restaurant sector for investors to consider.

This iSecret stock could make this pop look tiny

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Why Wendy's Co Popped 14% in November originally appeared on

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Wells Fargo. The Motley Fool has the following options: short January 2016 $52 puts on Wells Fargo. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More