I am an Equity Analyst and Accountant specializing in restaurant stocks, with a solid foundation in Business Administration and Accounting, complemented by an MBA in Forensic Accounting and Controllership. As the founder of Goulart's Restaurant Stocks, I lead a company focused on analyzing restaurant stocks in the U.S. market. Our coverage spans multiple segments, including QSR, fast casual, casual dining, fine dining, and family dining. We employ advanced analytical models and specialized valuation techniq ...

JPMorgan analyst John Ivankoe gives Wendy’s Co WEN a Neutral rating, lowering the price forecast to $17 from $20.Ivankoe stresses the need for improved cash returns from new U.S. units to accelerate growth, as Wendy’s U.S. units have grown by 1.4% since 2019 but declined by 2.9% since 2014.The analyst notes that despite a dividend cut to 56 cents from $1, the stock still offers an attractive 4% dividend yield, with over $135 million payment in FY25.Capital intensity is rising from $170 million in FY24 to $2 ...

Restaurant Operations - As of December 29, 2024, Wendy's operates 7,240 restaurants globally, with 5,933 in the U.S. and 1,307 in 31 foreign countries[15][16]. - In 2024, Wendy's opened 276 new restaurants while closing an equal number, resulting in a stable total of 7,240 restaurants at year-end[23]. - Company-operated restaurants accounted for approximately 5% of the total Wendy's system as of December 29, 2024[22]. - As of December 29, 2024, Wendy's operated approximately 5% of its total system as company-operated restaurants, with the remainder being franchised[42]. - In 2024, Wendy's completed 50 Franchise Flips, 3 restaurant dispositions, and no restaurant acquisitions, compared to 99 Franchise Flips and 1 restaurant disposition in 2023[45]. - Wendy's U.S. franchisees operated 5,552 franchised restaurants across 50 states and the District of Columbia, while international franchisees operated 1,294 restaurants in 31 countries[46]. - The total restaurant count at the end of 2024 was 7,240, unchanged from 2023, with 381 Company-operated and 5,552 franchised locations in the U.S.[191]. Financial Performance - Revenue increased by 3.0% to $2.25 billion in 2024 compared to $2.18 billion in 2023[181]. - Total revenues for 2024 were $2,246.5 million, an increase of 64.9 million or 3.0% compared to 2023[186]. - Net income decreased by 4.9% to $194.4 million in 2024 compared to $204.4 million in 2023[181]. - Operating profit for 2024 was $371.4 million, a decrease of 10.6% from $382.0 million in 2023[186]. - Franchise royalty revenue increased by $16.3 million to $528.4 million, driven by a 1.7% increase in global franchise same-restaurant sales[194]. - Franchise fees rose by $17.4 million to $97.6 million, attributed to early termination fees and higher IT service fees[195]. - U.S. same-restaurant sales for Company-operated locations were flat at 0.0%, while franchised locations saw a 1.5% increase[188]. - Global same-restaurant sales increased by 1.5%, with U.S. same-restaurant sales up by 1.4% and international same-restaurant sales up by 2.8% compared to 2023[181]. Strategic Initiatives - Wendy's strategic framework focuses on driving same-restaurant sales, accelerating digital growth, improving restaurant profitability, and expanding globally[20]. - The company has invested significantly in technology, enhancing mobile apps and loyalty programs to improve customer experience and operational efficiency[31]. - Wendy's maintains a state-of-the-art research and development facility to innovate and test new products, which is critical for attracting new customers[33]. - The company plans to accelerate restaurant development in new and existing international markets using a franchise model, but may need to invest more in advertising to build brand awareness[105]. Employee Engagement and Welfare - As of December 29, 2024, Wendy's had approximately 14,500 employees, with about one-third being full-time and two-thirds part-time[60]. - Wendy's maintains a focus on employee engagement, measuring effectiveness through annual surveys and tracking turnover rates compared to industry standards[59]. - The company emphasizes a commitment to providing market-competitive pay and benefits, including medical, dental, vision insurance, and 401(k) plans for U.S. employees[65]. - Wendy's prioritizes employee safety and well-being, offering resources such as an employee assistance program and paid sick time to support health[66]. - Wendy's invested in employee training and development programs, including Wendy's University for management skills, enhancing talent across the organization[67]. Competition and Market Risks - Wendy's faces intense competition in the quick-service restaurant sector, necessitating a focus on quality, variety, and customer experience to differentiate itself[35][36]. - The company faces competition from various food outlets, including grocery chains and convenience stores, which could affect customer counts and revenues[78]. - Adverse economic conditions, such as inflation and labor shortages, could lead to declines in consumer spending and negatively impact Wendy's results[80]. - Changes in consumer preferences and discretionary spending could adversely affect Wendy's business and financial condition[81]. Regulatory and Compliance Issues - The company is subject to various federal, state, and local regulations affecting operations, including health, safety, and labor laws, which could impact business[69]. - Wendy's international operations face similar regulations and may be affected by tariffs and foreign investment laws[71]. - The company believes its operations comply with environmental laws, but increased governmental focus on climate change may impact business[73]. - The company is subject to federal, state, and local environmental regulations, which may lead to unforeseen liabilities[102]. Technology and Cybersecurity - The company is heavily dependent on technology for operations, and any failures or interruptions could lead to delays and loss of sales[114]. - Cybersecurity incidents pose risks to the company's operations and reputation, with potential legal and financial repercussions if sensitive data is compromised[117]. - The company maintains cyber risk insurance coverage to mitigate financial impacts from cybersecurity incidents, though there is no assurance it will be sufficient[144]. - The company conducts regular risk assessments as part of its cybersecurity risk management strategy, involving key stakeholders[143]. Financial Obligations and Debt - As of December 29, 2024, the company had approximately $2.7 billion of outstanding debt on its balance sheet, with an additional $300 million available through variable funding notes[121]. - The company's ability to make payments on its debt and fund capital expenditures will largely depend on future operating performance and cash flow generation[122]. - The company is subject to various covenants that limit its ability to incur additional indebtedness, sell assets, or engage in certain transactions, potentially impacting future growth[120]. - Significant contractual commitments and liabilities, including beverage purchases and franchisee leases, could adversely affect the company's liquidity[123]. Shareholder and Governance Matters - The concentration of ownership among certain stockholders, including Nelson Peltz and others, represents approximately 15% of the company's total voting power, influencing corporate decisions[125]. - The company has anti-takeover provisions in its certificate of incorporation, allowing the Board to issue preferred stock without shareholder approval, which could affect capital raising efforts[127]. - The company's subsidiaries' ability to pay dividends is contingent upon achieving sufficient cash flows after meeting their respective cash requirements[124]. Marketing and Brand Management - The effectiveness of marketing and new product development is crucial for maintaining brand value and attracting customers[84]. - Social media risks could harm Wendy's brand and reputation if not managed effectively, impacting customer engagement and revenues[85]. - The company relies on a combination of trademarks, copyrights, and trade secrets to protect its brand, which is critical for business strategy[87]. - Approximately 95% of the restaurants in the Wendy's system are operated by franchisees, which presents risks related to brand image and operational standards[93].

Financial Data and Key Metrics Changes - Global system-wide sales increased by 5.4% in Q4, reaching $3.7 billion, driven by same-restaurant sales growth of 4.1% in the U.S. and 4.9% internationally [38][39] - Adjusted EBITDA increased by 8.6% to $137.5 million, with adjusted earnings per share rising to $0.25, a $0.04 increase over the prior year [41][42] - Full year 2024 total system-wide sales reached $14.5 billion, reflecting over 3% growth compared to the prior year [14] Business Line Data and Key Metrics Changes - U.S. same-restaurant sales growth was 1.4%, while international same-restaurant sales grew by 2.8% [14] - Breakfast sales grew over 6%, outpacing the QSR burger category, driven by increased awareness and impactful innovation [15][28] - Digital sales grew nearly 40% year-over-year, with loyalty member growth up 25% [11][17] Market Data and Key Metrics Changes - The U.S. business maintained or grew dollar and traffic share in the QSR burger category in every quarter [14] - Internationally, system-wide sales grew by 11% on a constant currency basis, led by strong net unit growth [10] - The morning daypart contributed to U.S. growth with sales up over 4% compared to the prior year [10] Company Strategy and Development Direction - The company aims to drive sales and EBITDA growth through three strategic initiatives: Fresh Famous Food, delivering an exceptional customer experience, and accelerating global unit development [25] - Plans to expand in fast-growing categories, including chicken and beverages, while maintaining a focus on value through the Biggie Bag platform [26][27] - The company is committed to increasing operational intensity and enhancing customer experience through technology investments, including digital menu boards and AI voice-enabled ordering [31][32] Management's Comments on Operating Environment and Future Outlook - Management expects Q1 2025 to be the low point for same-restaurant sales, with improvements anticipated as the year progresses [65][66] - The company acknowledges industry traffic headwinds but remains optimistic about regaining momentum through innovative programming and marketing efforts [113][114] - The updated capital allocation policy aims to maximize long-term shareholder value while increasing investments in growth initiatives [45][48] Other Important Information - The company opened 113 new restaurants in Q4 and closed underperforming locations, which is expected to be a headwind to sales growth in 2025 [12][19] - The company plans to increase share repurchases to up to $200 million in 2025, demonstrating confidence in growth plans [48][49] - The company has established a target net leverage ratio of 3.5x to 5x adjusted EBITDA [48] Q&A Session Summary Question: What are the embedded comp expectations for the year? - Management expects positive same-restaurant sales growth for 2025, despite a projected decline in Q1 due to industry traffic headwinds [65][66] Question: Can you elaborate on the unit development outlook? - Management has high confidence in the 2% to 3% net unit growth guidance, with agreements in place for new builds [69][70] Question: What are the big bucket opportunities to drive comps? - Management is focusing on core menu innovation, value propositions, and operational intensity to enhance customer experience [76][78] Question: Why choose share repurchase over reinvestment? - The capital allocation policy allows for both attractive dividends and accelerated growth plans, taking advantage of favorable stock prices [82] Question: What are the early learnings from the voice of the drive-thru pilot? - The pilot has shown improvements in speed of service and sales, with plans to expand to more locations [121][122] Question: How do you expect the breakfast daypart to trend in 2025? - Breakfast is expected to grow faster than the rest of the business, with ongoing investments in awareness and innovation [90][138]

Core Insights - Wendy's reported revenue of $574.27 million for the quarter ended December 2024, marking a year-over-year increase of 6.2% and exceeding the Zacks Consensus Estimate by 1.79% [1] - The earnings per share (EPS) for the same period was $0.25, up from $0.21 a year ago, representing a surprise of 4.17% over the consensus estimate of $0.24 [1] Financial Performance Metrics - Total number of restaurants stood at 7,240, slightly below the nine-analyst average estimate of 7,270 [4] - Same-Restaurant sales in the U.S. increased by 4.1%, surpassing the 3% estimate by analysts [4] - International Same-Restaurant sales rose by 4.9%, compared to the 2.1% average estimate [4] - Global Same-Restaurant sales were up 4.3%, exceeding the 3.4% estimate [4] - U.S. restaurant count was 5,933, compared to the average estimate of 5,963 [4] Revenue Breakdown - Advertising funds revenue was $114.93 million, slightly below the average estimate of $115.50 million, but showed a year-over-year increase of 5.5% [4] - Franchise rental income reached $58.56 million, slightly above the estimate of $58.47 million, with a year-over-year change of 3.2% [4] - Franchise royalty revenue and fees totaled $167.96 million, exceeding the average estimate of $157.88 million, reflecting a significant year-over-year increase of 31.4% [4] - Franchise fees revenue was $34.18 million, significantly higher than the estimated $25.03 million, marking a 67% year-over-year increase [4] - Franchise royalty revenue was reported at $133.79 million, slightly above the estimate of $133.49 million [4] Systemwide Sales - International systemwide sales amounted to $495 million, slightly above the average estimate of $493.44 million [4] - Total systemwide sales reached $3.67 billion, exceeding the estimate of $3.65 billion [4]

Core Insights - Wendy's reported quarterly earnings of $0.25 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, and showing an increase from $0.21 per share a year ago, representing an earnings surprise of 4.17% [1] - The company achieved revenues of $574.27 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.79% and increasing from $540.65 million year-over-year [2] - Wendy's shares have declined approximately 12.8% since the beginning of the year, contrasting with the S&P 500's gain of 2.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $544.96 million, while for the current fiscal year, the estimate is $1.03 on revenues of $2.28 billion [7] - The estimate revisions trend for Wendy's is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Retail - Restaurants industry, to which Wendy's belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another competitor in the same industry, Domino's Pizza, is expected to report quarterly earnings of $4.95 per share, reflecting a year-over-year increase of 10.5%, with revenues anticipated at $1.48 billion, up 5.4% from the previous year [9][10]

Financial Performance - Wendy's systemwide sales grew 5.4% in Q4 2024, reaching $3.7 billion, with same-restaurant sales growth of 4.3%[4] - Total revenues for Q4 2024 were $574.3 million, an increase of 6.4%, while full-year revenues reached $2.2 billion, up 2.0%[4] - Net income for Q4 2024 was $47.5 million, with adjusted EBITDA of $137.5 million, reflecting an 8.6% increase[4] - Adjusted earnings per share for Q4 2024 was $0.25, a 19.0% increase, while full-year adjusted earnings per share was $1.00, up 3.1%[4] - The Company reported adjusted revenue growth of 10% year-over-year, reaching $1.5 billion for the quarter[44] - Same-restaurant sales increased by 5% compared to the previous year, indicating strong customer demand[49] - Systemwide sales reached $4.2 billion, reflecting a 7% increase driven by both Company-operated and franchise restaurants[49] - Adjusted EBITDA for the quarter was $400 million, representing a 12% margin[45] - Net income for the three months ended December 29, 2024, was $47,497, compared to $46,938 for the same period in 2023, reflecting a slight increase of 1.2%[64] - Adjusted EBITDA for the twelve months ended December 29, 2024, was $543,614, an increase from $535,928 in the previous year, indicating a growth of about 1.3%[64] - The diluted earnings per share for the twelve months ended December 29, 2024, was $0.95, compared to $0.97 for the previous year, a decrease of about 2.1%[64] - Net income for the three months ended December 31, 2023, was $46,938,000, compared to $47,497,000 for the same period in 2024, reflecting a decrease of 1.2%[67] - Adjusted income for the twelve months ended December 31, 2023, was $206,111,000, slightly down from $205,248,000 in 2024, indicating a decrease of 0.4%[67] - Free cash flow for the twelve months ended December 31, 2023, was $274,261,000, increasing to $278,950,000 in 2024, representing a growth of 1.2%[70] - Diluted earnings per share for the three months ended December 31, 2023, was $0.23, consistent with the same period in 2024[67] - Adjusted earnings per share for the twelve months ended December 31, 2023, was $0.97, slightly decreasing to $1.00 in 2024, reflecting an increase of 3.1%[67] - Net cash provided by operating activities increased from $345,416,000 in 2023 to $355,307,000 in 2024, a rise of 2.6%[70] Capital Allocation and Future Plans - The company updated its capital allocation policy, targeting a dividend payout ratio of 50% to 60% of adjusted earnings and plans to repurchase up to $200 million of shares in 2025[4] - For 2025, the company expects global systemwide sales growth of 2.0% to 3.0% and adjusted EBITDA of $550 to $560 million[36] - The company plans to pay a quarterly dividend of $0.14 per share starting in Q2 2025[30] - Free cash flow for 2025 is projected to be between $275 million and $285 million[36] - The company repurchased 0.9 million shares for $15.4 million in Q4 2024, with approximately $228.1 million remaining under the share repurchase authorization[27] - The Company plans to open 100 new restaurants in the upcoming fiscal year, focusing on market expansion[40] - The Company aims to achieve a 15% increase in digital sales by enhancing its digital commerce strategy[40] - The Company is investing in new product development, with a goal to launch three new menu items in the next quarter[40] Financial Position and Liabilities - Cash and cash equivalents decreased to $450,512 as of December 29, 2024, down from $516,037 as of December 31, 2023, a decline of about 12.7%[60] - Total current liabilities increased to $397,631 as of December 29, 2024, compared to $381,930 as of December 31, 2023, representing an increase of approximately 4.1%[60] - Total assets decreased to $5,034,843 as of December 29, 2024, down from $5,182,826 as of December 31, 2023, a decline of approximately 2.9%[60] - The company’s total liabilities decreased to $4,775,491 as of December 29, 2024, down from $4,873,047 as of December 31, 2023, indicating a reduction of approximately 2.0%[60] - Capital expenditures rose from $85,021,000 in 2023 to $94,388,000 in 2024, marking an increase of 11%[70] - Advertising funds revenue for the twelve months ended December 31, 2023, was $(428,996,000), increasing to $(458,092,000) in 2024, a decline of 6.8%[67] - Total adjustments, net of income taxes, for the twelve months ended December 31, 2023, were $1,671,000, increasing to $10,891,000 in 2024, a significant rise of 551.5%[67] - System optimization gains, net, decreased from $(880,000) in 2023 to $(1,219,000) in 2024, indicating a decline of 38.5%[67]

Core Insights - The Wendy's Company reported strong fourth quarter performance, achieving its 14th consecutive year of global same-restaurant sales growth [1][5] Financial Highlights - Fourth quarter total revenues reached $574.3 million, an increase of 6.4% compared to the previous year [5][6] - Adjusted revenues for the fourth quarter were $459.3 million, also reflecting a 6.4% increase [5][6] - Full year total revenues were $2.2 billion, with adjusted revenues of $1.8 billion, marking a 2.0% increase [5][6] - Net income for the fourth quarter was $47.5 million, with adjusted EBITDA of $137.5 million, an increase of 8.6% [5][6] - Full year net income was $194.4 million, with adjusted EBITDA of $543.6 million, an increase of 1.4% [5][6] Sales Performance - Systemwide sales grew 5.4% in the fourth quarter, reaching $3.7 billion, with same-restaurant sales growth of 4.3% [5][6] - For the full year, systemwide sales grew 3.1%, totaling $14.5 billion, with same-restaurant sales growth of 1.5% [5][6] - U.S. same-restaurant sales growth for the fourth quarter was 4.1%, compared to 0.9% in the previous year [4][5] - International same-restaurant sales growth was 4.9% in the fourth quarter, up from 4.3% [4][5] Operational Highlights - The company opened 36 new restaurants in the U.S. during the fourth quarter, while closing 78, resulting in a net decrease [4][5] - Internationally, 77 new restaurants were opened, with a net increase of 26 [4][5] - The global restaurant count remained stable at 7,240 by the end of the year [4][5] Capital Allocation and Shareholder Returns - The company updated its capital allocation policy, targeting a dividend payout ratio of 50% to 60% of adjusted earnings [5][26] - Plans to repurchase up to $200 million of shares in 2025 were announced, with a majority expected to be acquired in the coming months [5][27] - A quarterly dividend of $0.25 per share was declared, payable on March 17, 2025 [5][24] Future Outlook - The company expects global systemwide sales growth of 2.0% to 3.0% for 2025 [34] - Adjusted earnings per share are projected to be between $0.98 and $1.02, with adjusted EBITDA expected to be between $550 million and $560 million [34]

Core Viewpoint - Wendy's Company (WEN) is set to report its fourth-quarter 2024 results on February 13, with expectations of earnings and revenue growth compared to the previous year [1][2]. Group 1: Earnings and Revenue Estimates - The Zacks Consensus Estimate for earnings is 24 cents per share, reflecting a 14.3% increase from the same quarter last year [2]. - Revenue is expected to reach $564.2 million, indicating a 4.4% improvement year-over-year [2]. Group 2: Performance Drivers - Wendy's fourth-quarter performance is anticipated to be supported by menu innovation, technological upgrades, and international expansion [3]. - The introduction of new products, such as the Krabby Patty Burger and Pineapple Under the Sea Frosty, is expected to positively impact sales [3]. Group 3: Same-Restaurant Sales Growth - The company is likely to report robust same-restaurant sales growth, with U.S. systemwide same-restaurant sales predicted to increase by 1.9% and international sales by 2.9% compared to the prior year [4]. - Higher average checks, driven by pricing strategies and product innovations, are expected to contribute to this growth [4]. Group 4: Sales Expectations - Total U.S. sales are projected to rise by 3%, while international sales are expected to increase by 11.9% year-over-year [5]. - However, inflationary pressures are anticipated to negatively affect the bottom line, with total costs and expenses expected to rise by 1.9% year-over-year [5]. Group 5: Earnings Prediction Model - The Zacks model suggests a potential earnings beat for Wendy's, with an Earnings ESP of +2.34% [6]. - Wendy's currently holds a Zacks Rank of 3, indicating a neutral outlook [7].

Core Insights - Wendy's is expected to report quarterly earnings of $0.24 per share, reflecting a 14.3% increase year-over-year, with revenues projected at $564.17 million, a 4.4% increase from the previous year [1] - There has been a downward revision of 0.9% in the consensus EPS estimate over the past 30 days, indicating a reappraisal by analysts [1][2] Revenue Estimates - Analysts estimate 'Revenues- Advertising funds' to reach $115.50 million, a 6.1% increase from the prior year [4] - 'Revenues- Sales at Company-operated restaurants' are expected to be $231.89 million, reflecting a 2.3% increase year-over-year [4] - 'Revenues- Franchise rental income' is projected at $58.47 million, indicating a 3% year-over-year change [5] - 'Revenues- Franchise royalty revenue and fees' are expected to be $157.88 million, showing a significant increase of 23.5% [5] Restaurant Metrics - The total number of restaurants is estimated to be 7,270, up from 7,240 a year ago [5] - 'Same-Restaurant - International' is projected at 2.1%, down from 4.3% year-over-year [6] - The total number of franchised restaurants is expected to be 6,870, compared to 6,825 last year [6] - The number of company-operated restaurants is forecasted to be 409, down from 415 a year ago [6] Global Performance - 'Same-Restaurant - Global' is expected to be 3.4%, slightly up from 3.2% year-over-year [7] - Systemwide sales for U.S. Company-operated restaurants are projected to reach $226.71 million, compared to $220.50 million in the same quarter last year [7] - The number of international franchised restaurants is expected to be 1,312, up from 1,198 a year ago [7] - The total number of international restaurants is projected at 1,326, compared to 1,210 in the same quarter last year [8] Stock Performance - Wendy's shares have shown a return of -4.5% over the past month, contrasting with the Zacks S&P 500 composite's +4.2% change [8]