Wendy’s Earnings per Share Outperform Analyst Estimates in 1Q18



1Q18 performance

Wendy’s (WEN) posted EPS (earnings per share) of $0.08 in 1Q18. However, removing special items, the adjusted EPS stood at $0.11, versus analysts’ expectation of $0.10. Compared to 1Q17, the company’s EPS increased 22.2%.

Wendy’s EPS growth was driven by revenue growth, a lower effective tax rate, and share repurchases, partially offset by a lower EBITDA margin. Wendy’s effective tax rate in 1Q18 was at 26%, compared to 38.7% in 1Q17.

From the beginning of 2Q17 to the end of 1Q18, Wendy’s repurchased ~9.7 million shares for ~$149 million. In 1Q18, the company repurchased 2.4 million shares for $39.4 million. Share repurchases drive the company’s EPS by lowering the number of shares outstanding.

From the above graph, you can see that Wendy’s has outperformed analysts’ estimates three times in the last five quarters.

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Peer comparisons

For the same period, McDonald’s (MCD) and Restaurant Brands International (QSR) posted EPS growth of 21.8% and 83.3%, while Jack in the Box (JACK) is expected to post a decline of 12.8%.


Analysts expect Wendy’s to post EPS of $0.57, which represents growth of 23.9% from $0.46 in the corresponding four quarters of the previous year. For 2018, the company’s management set its EPS guidance in the range of $0.55 to $0.57, which represents year-over-year growth of 41% to 46%.

Next in this series, we’ll look at Wendy’s valuation multiple.


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