The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Wendy's (NASDAQ:WEN) and the rest of the traditional fast food stocks fared in Q2.
Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
The 14 traditional fast food stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. Thankfully, traditional fast food stocks have been resilient with share prices up 5.3% on average since the latest earnings results.
Wendy's (NASDAQ:WEN) Founded by Dave Thomas in 1969, Wendy’s (NASDAQ:WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.
Wendy's reported revenues of $570.7 million, up 1.6% year on year. This print fell short of analysts’ expectations by 1%. Overall, it was a mixed quarter for the company with in-line earnings guidance for the full year.
"Our restaurants across the globe continued to deliver same-restaurant sales growth, holding steady with the QSR burger category in the second quarter," President and Chief Executive Officer Kirk Tanner said.
Unsurprisingly, the stock is down 1.2% since reporting and currently trades at $16.74.
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Best Q2: El Pollo Loco (NASDAQ:LOCO) With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.
El Pollo Loco reported revenues of $122.2 million, flat year on year, outperforming analysts’ expectations by 1.5%. It was a very strong quarter for the company with a decent beat of analysts’ earnings estimates.
The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $13.41.
Slowest Q2: Starbucks (NASDAQ:SBUX) Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Starbucks reported revenues of $9.11 billion, flat year on year, falling short of analysts’ expectations by 1.5%. It was a weaker quarter for the company with a miss of analysts’ revenue estimates.
Interestingly, the stock is up 20.3% since the results and currently trades at $91.32.
Yum China (NYSE:YUMC) One of China’s largest restaurant companies, Yum China (NYSE:YUMC) is an independent entity spun off from Yum! Brands (NYSE:YUM) in 2016.
Yum China reported revenues of $2.68 billion, flat year on year, falling short of analysts’ expectations by 2.9%. Overall, it was a weak quarter for the company with some shareholders hoping for a better result.
Yum China had the weakest performance against analyst estimates among its peers. The stock is up 15% since reporting and currently trades at $34.30.
Papa John's (NASDAQ:PZZA) Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ:PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Papa John's reported revenues of $507.9 million, down 1.3% year on year, falling short of analysts’ expectations by 2.5%. Zooming out, it was a weaker quarter for the company with some shareholders hoping for a better result.
The stock is up 12.3% since reporting and currently trades at $47.71.
This content was originally published on Stock Story
