Financial Analysis: Wendy’s Company (The) (WEN) and Its Competitors

Wendy’s Company (The) (NASDAQ: WEN) is one of 22 publicly-traded companies in the “Quick Service Restaurants” industry, but how does it contrast to its competitors? We will compare Wendy’s Company (The) to similar companies based on the strength of its earnings, analyst recommendations, profitability, dividends, valuation, institutional ownership and risk.

Insider and Institutional Ownership

76.5% of Wendy’s Company (The) shares are held by institutional investors. Comparatively, 80.0% of shares of all “Quick Service Restaurants” companies are held by institutional investors. 26.5% of Wendy’s Company (The) shares are held by company insiders. Comparatively, 16.8% of shares of all “Quick Service Restaurants” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Wendy’s Company (The) and its competitors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wendy’s Company (The) 0 8 8 0 2.50
Wendy’s Company (The) Competitors 326 1455 1659 85 2.43

Wendy’s Company (The) currently has a consensus price target of $15.73, indicating a potential upside of 0.02%. As a group, “Quick Service Restaurants” companies have a potential upside of 13.68%. Given Wendy’s Company (The)’s competitors higher possible upside, analysts plainly believe Wendy’s Company (The) has less favorable growth aspects than its competitors.

Volatility and Risk

Wendy’s Company (The) has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Wendy’s Company (The)’s competitors have a beta of 0.53, suggesting that their average stock price is 47% less volatile than the S&P 500.

Profitability

This table compares Wendy’s Company (The) and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Wendy’s Company (The) 7.68% 19.67% 2.71%
Wendy’s Company (The) Competitors 6.90% 12.59% 9.54%

Dividends

Wendy’s Company (The) pays an annual dividend of $0.28 per share and has a dividend yield of 1.8%. Wendy’s Company (The) pays out 75.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Quick Service Restaurants” companies pay a dividend yield of 1.6% and pay out 43.1% of their earnings in the form of a dividend.

Valuation and Earnings

This table compares Wendy’s Company (The) and its competitors revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Wendy’s Company (The) $1.28 billion $385.41 million 42.51
Wendy’s Company (The) Competitors $3.06 billion $846.52 million 29.49

Wendy’s Company (The)’s competitors have higher revenue and earnings than Wendy’s Company (The). Wendy’s Company (The) is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Summary

Wendy’s Company (The) beats its competitors on 8 of the 15 factors compared.

About Wendy’s Company (The)

The Wendy’s Company is the parent company of subsidiary holding company Wendy’s Restaurants, LLC (Wendy’s Restaurants). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (Wendy’s), which is the owner and franchisor of the Wendy’s restaurant system in the United States. Wendy’s is a restaurant company specializing in the hamburger sandwich segment. Wendy’s is engaged in the business of operating, developing and franchising a system of restaurants serving food. The Company operated approximately 6,080 Wendy’s restaurants in operation in North America, as of January 1, 2017. Of these restaurants, 330 were operated by the Company and 5,768 by a total of 376 franchisees, as of January 1, 2017. In addition, as of January 1, 2017, there were 439 franchised Wendy’s restaurants in operation in 29 countries and territories other than North America. Wendy’s is also a partner in a restaurant real estate joint venture with a subsidiary of Restaurant Brands International Inc.

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