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Will Wendy’s 2Q17 Earnings Boost Its Stock Price?

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Stock performance

Wendy’s (WEN) is all set to announce its 2Q17 earnings before the market opens on August 9, 2017.

In 1Q17, the company posted adjusted EPS (earnings per share) of $0.09 on revenues of $285.8 million. Analysts were expecting the company to post EPS of $0.08 on revenues of $282.6 million. The company’s same-store sales growth (or SSSG) of 1.6% in North America beat analysts’ estimate of 1.1%. The better-than-expected 1Q17 SSSG and earnings appear to have increased investors’ confidence, leading to the rise in the company’s stock price. As of August 3, 2017, Wendy’s was trading at $15.34, which represents growth of 1.6% since the announcement of its 1Q17 earnings.

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Year-to-date performance

2017 has been a good year for Wendy’s. The company’s stock price has increased by 13.5%, year-to-date. During the same period, peers McDonald’s (MCD), Jack in the Box (JACK), and Restaurant Brands International (QSR) have returned 27.1%, -17.2%, and 27.3%, respectively.

Notably, the iShares U.S. Consumer Services ETF (IYC) and S&P 500 Index (SPX) have returned 10.0% and 10.4% year-to-date, respectively. IYC invests 11.7% of its holdings in travel and restaurant companies.

Series overview

With Wendy’s 2Q17 earnings around the corner, we’ll look at analysts’ revenue, EBIT (earnings before interest and tax), and EPS (earnings per share) estimates. We will also cover management’s 2017 guidance and analysts estimates for the next four quarters. Finally, we will wrap this series up by looking at Wendy’s valuation multiple and analysts’ recommendations.

First, let’s start by looking at analysts’ 2Q17 revenue estimates.

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