Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolio

Wendy's (NASDAQ:WEN) Reports Sales Below Analyst Estimates In Q1 Earnings

Published 2024-05-02, 07:28 a/m
Wendy's (NASDAQ:WEN) Reports Sales Below Analyst Estimates In Q1 Earnings
WEN
-

Stock Story -

Fast-food chain Wendy’s (NASDAQ:WEN) fell short of analysts' expectations in Q1 CY2024, with revenue up 1.1% year on year to $534.8 million. It made a non-GAAP profit of $0.23 per share, improving from its profit of $0.21 per share in the same quarter last year.

Is now the time to buy Wendy's? Find out by reading the original article on StockStory, it's free.

Wendy's (WEN) Q1 CY2024 Highlights:

  • Revenue: $534.8 million vs analyst estimates of $540.5 million (1.1% miss)
  • EPS (non-GAAP): $0.23 vs analyst estimates of $0.21 (8.1% beat)
  • Gross Margin (GAAP): 35.3%, in line with the same quarter last year
  • Free Cash Flow of $82.63 million, up 77.5% from the previous quarter
  • Same-Store Sales were up 0.9% year on year
  • Market Capitalization: $4.03 billion

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.

Traditional Fast FoodTraditional 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.

Sales GrowthWendy's is larger than most restaurant chains and benefits from economies of scale, giving it an edge over its smaller competitors.

As you can see below, the company's annualized revenue growth rate of 6.2% over the last five years was mediocre , but to its credit, it opened new restaurants and grew sales at existing, established dining locations.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

This quarter, Wendy's revenue grew 1.1% year on year to $534.8 million, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 4.4% over the next 12 months, an acceleration from this quarter.

Same-Store SalesSame-store sales growth is an important metric that tracks organic growth and demand for a restaurant's established locations.

Wendy's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 4.4% year on year. With positive same-store sales growth amid an increasing number of restaurants, Wendy's is reaching more diners and growing sales.

In the latest quarter, Wendy's year on year same-store sales were flat. By the company's standards, this growth was a meaningful deceleration from the 8% year-on-year increase it posted 12 months ago. We'll be watching Wendy's closely to see if it can reaccelerate growth.

Key Takeaways from Wendy's Q1 Results

We were impressed by how significantly Wendy's blew past analysts' gross margin expectations this quarter. We were also happy its EPS narrowly outperformed Wall Street's estimates. On the other hand, its revenue missed as its same-store sales growth came up short.

Looking ahead, Wendy's full-year EPS guidance was in line with estimates while its adjusted EBITDA and free cash flow came in slightly higher thanks to better-than-expected digital sales, which boost margins. Wendy's also said its breakfast menu items are seeing success, a key part of its strategy.

Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is flat after reporting and currently trades at $19.8 per share.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.