Stock performance

Despite the weakness in the broader equity market, Wendy’s (WEN) stock rose in today’s early morning trade as the company outperformed analysts’ revenue and EPS estimates in its first quarter. Today, Wendy’s was trading 1.8% higher as of 10:07 AM EST.

Wendy’s Stock Rises after Impressive First-Quarter Results

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Year-to-date performance

Wendy’s has returned 18.3% YTD as of May 7. Wendy’s has outperformed McDonald’s (MCD) and Jack in the Box (JACK), who have returned 11.5% and -1.0% YTD, respectively. However, Wendy’s returns fell short of Restaurant Brands International (QSR), which has delivered a strong return of 28.7%.

Valuation multiple

The optimism surrounding the expansion of Wendy’s delivery service, implementation of digital advancements, and the strengthening of the broader equity market have led to a rise in Wendy’s stock price. The surge in Wendy’s stock price since the beginning of this year has also increased its valuation multiple. As of May 7, the company was trading at a forward PE multiple of 27.7x compared to 23.6x at the start of this year.

Wendy’s is trading at a premium compared to McDonald’s, Jack in the Box, and Restaurant Brands International, who are trading at a forward PE multiple of 23.9x, 16.0x, and 23.9x, respectively.

Outlook

For 2019, Wendy’s management expects its systemwide sales to grow by 2.0% to 4.0%, while its adjusted EPS are projected to rise by 3.5% to 7.0%.

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