Wendy's Stock Down 19% in a Month: Should You Buy the Dip?

Core Viewpoint - Wendy's stock has experienced a significant decline of 18.9% over the past month, primarily due to macroeconomic challenges, stiff competition, and high operating costs [1][17]. Financial Performance - For fiscal 2025, Wendy's projects commodity inflation of about 1% and wage inflation of approximately 4%, with total costs and expenses expected to rise 1% year over year to $1.9 billion [2]. - The stock closed at $12.54, which is 39% below its 52-week high of $20.65, and has underperformed compared to industry peers [3]. Sales Growth - Wendy's reported robust global same-restaurant sales growth, with international restaurants (excluding Argentina) seeing a 4.9% year-over-year increase in the fourth quarter of fiscal 2024, compared to 4.3% a year ago [6]. - The company’s breakfast sales grew over 6% year over year in 2024, outperforming the QSR burger category, driven by increased brand awareness and product innovation [8]. Strategic Initiatives - Wendy's plans to sustain breakfast momentum through product innovation, strategic partnerships, and targeted promotions, reallocating advertising funds to enhance customer experience [9]. - The company expanded its system footprint by opening 276 restaurants globally in fiscal 2024 and anticipates opening between 150 and 200 units in 2025, with a focus on international markets [10][11]. Valuation - Wendy's is currently valued at a discount compared to the industry on a forward 12-month P/E basis, with a ratio of 12.16 [12]. - Earnings estimate revisions for 2025 indicate a projected decline of 0.1% in sales and 1% in EPS, contrasting with growth expectations for competitors [16].