Wendy's Needs Improved Cash Returns From New US Units To Accelerate Growth, Analyst Says

Core Viewpoint - JPMorgan analyst John Ivankoe has given Wendy's Co a Neutral rating and lowered the price forecast to $17 from $20, emphasizing the need for improved cash returns from new U.S. units to accelerate growth [1] Group 1: Financial Performance - Wendy's U.S. units have experienced a growth of 1.4% since 2019 but a decline of 2.9% since 2014 [1] - Despite a dividend cut from $1 to 56 cents, the stock still offers an attractive 4% dividend yield, with over $135 million in payments expected in FY25 [1] Group 2: Capital Expenditure and Growth Strategy - Capital intensity is projected to rise from $170 million in FY24 to $206 million in FY25, driven by increased contributions for new franchise builds in the U.S., which will increase from $41 million in FY24 to $70 million in FY25 [2] - The analyst forecasts unit growth around 3% from FY25 to FY27, leading to low-single-digit system sales growth, mid-single-digit EBITDA growth, and mid-to-high-single-digit EPS growth [2] Group 3: Technological Advancements - 2025 is expected to see faster adoption of digital menu boards and kiosks in U.S. stores to enhance ordering efficiency [4] - The FreshAI voice-enabled drive-through is currently in over 100 locations, with plans to expand to 500-600 stores by 2025 [4] Group 4: Upcoming Events - Anticipation is building for the March 6 investor update at Wendy's Dublin, Ohio headquarters, which will focus on CEO Kirk Tanner's first year and CFO Ken Cook's new role [3]