Wendy’s Outperformed Peers in EPS Growth in 2Q17
With EPS (earnings per share) growth of 50%, Wendy’s (WEN) outperformed its peers in 2Q17. The company has posted EPS of $0.15 compared to $0.10 in 2Q16.
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Wendy’s EPS was driven by the expansion of EBIT margins, a favorable tax rate, and share repurchases. The share repurchases and favorable effective tax rate contributed $0.02 towards 2Q17 EPS. However, some of the EPS growth was offset by a decline in revenues.
Wendy’s was followed by Restaurant Brands International (QSR) with EPS growth of 24.4%. The company posted EPS of $0.51 compared to $0.41 in 2Q16. The EPS growth was driven by revenue growth, expansion of EBIT margins, and a favorable effective tax rate.
QSR was followed by McDonald’s (MCD). McDonald’s posted EPS of $1.73, which represents growth of 19.3% from $1.45 in 2Q16. The expansion of EBIT margins, share repurchases, and a lower effective tax rate was higher than the revenue decline, allowing the company to post EPS growth. In 2Q17, the company’s effective tax rate fell from 33.0% to 31.8%.
Jack in the Box’s (JACK) EPS fell 7.5% from $1.07 in 2Q17 to $0.99. The decline in EPS was due to a contraction in its EBIT margins and revenue decline. However, some of the declines were offset by share repurchases and a lower effective tax rate.
For the next four quarters, analysts are expecting McDonald’s (MCD), Jack in the Box (JACK), Wendy’s (WEN), and Restaurant Brands International (QSR) to post EPS growth of 7.0%, 9.8%, 16.3%, and 27.0%, respectively.
Next, we will look at dividend policies of fast food restaurants.