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Did Wendy’s 2Q17 Earnings Impress Investors?

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WEN’s 2Q17 performance

Wendy’s (WEN) posted its 2Q17 earnings on May 9, 2017, reporting adjusted EPS (earnings per share) of $0.15 on revenues of $320.3 million, which was 50.0% higher YoY (year-over-year), while its revenue fell 16.3%.

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Stock performance

Analysts were expecting Wendy’s to post EPS of $0.13 on revenues of $301.8 million. The company reported SSSG (same-store sales growth) of 3.2% in North America, compared with the analysts’ expectation of 3.1%.

After its strong 2Q17 earnings, Wendy’s management raised its 2017 EBITDA (earnings before interest, tax, depreciation, and amortization) guidance, which appears to have increased investor confidence, leading to a rise in Wendy’s stock price. On August 10, 2017, Wendy’s was trading at $15.26, which represents a rise of 0.3% since the announcement of its 2Q17 earnings.

Year-to-date performance

It’s been a good year for Wendy’s so far. The stock has grown 12.9% YTD (year-to-date). During the same period, peers Jack in the Box (JACK), McDonald’s (MCD), and Restaurant Brands International (QSR) have returned -14.4%, 28.7%, and 25.3%, respectively.

Notably, the broader comparative indexes, the Consumer Discretionary Select Sector SPDR Fund (XLY) and the S&P 500 Index (SPX), have returned 9.8%, and 8.9%, respectively, YTD. XLY has 12.7% of its holdings in restaurants and travel companies.

Series overview

In this series, we’ll assess Wendy’s 2Q17 earnings call and performance in key metrics. We’ll also cover Wendy’s management guidance and the analysts’ estimates for the next the four quarters. We’ll wrap up this series with a look at WEN’s valuation multiple and the analysts’ recommendations.

Let’s start by looking at Wendy’s 2Q17 revenues.

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