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Can Wendy’s First-Quarter Earnings Boost Its Stock Price?

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Stock performance

Wendy’s (WEN) is slated to report its first-quarter earnings before the market opens on May 8. As of April 29, the company was trading at $18.71, which represents a rise of 5.9% since the announcement of its fourth-quarter earnings on February 21. The company is also trading at a 25.1% premium to its 52-week low of $14.96 and a discount of 1.5% from its stock price of $19.00.

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Last quarter, Wendy’s (WEN) posted adjusted EPS of $0.16, outperforming analysts’ expectation of $0.15. However, the company’s revenue and SSSG (same-store sales growth) were below analysts’ estimates. Wendy’s revenue came in at $397.8 million, falling short of analysts’ estimate of $400.0 million, while its SSSG was at 0.2%, against analysts’ estimate of 0.7%.

Despite posting lower-than-expected sales in the fourth quarter, the stock price rose. Investors’ optimism surrounding the expansion of Wendy’s delivery service, digital advancements, and a strengthening broader equity market appears to have contributed to a rise in the stock price.

Year-to-date performance

Wendy’s has had a strong start to 2019 with its stock price returning 19.9% YTD (year-to-date). In comparison, Wendy’s peers, McDonald’s (MCD), Jack in the Box (JACK), and Restaurant Brands International (QSR) have returned 11.0%, 0.2%, and 25.2%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), has delivered a return of 21.5% YTD.

 

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