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Wendy Q2 Earnings Preview: What’s Ahead?
Stock Analysis & Ideas

Wendy Q2 Earnings Preview: What’s Ahead?

Fast-food chain Wendy’s (WEN) is scheduled to report second-quarter 2021 earnings on August 11, after the markets close.

Shares of the company are up 7% over the past six months, trading above $22. Solid Q2 results might propel the stock price upward, so let’s take a closer look at what analysts are expecting.

Q2 Expectations

For Q2, the Street expects Wendy’s to report adjusted EPS of $0.18 and revenues of $461.69 million. (See Wendy’s dividend date and history on TipRanks)

Wendy’s Q1 Snapshot

Wendy’s total revenues came in at $460.2 million, an increase of 13.6% year-over-year. The upside was driven by higher sales at company-operated restaurants and a rise in franchisee royalty revenues, the company said.

Adjusted earnings per share came in at $0.20, up 122.2% year-over-year.

Systemwide, the company’s U.S., International, and Global sales grew 13.1%, 7.3%, and 12.5%, respectively, on a year-over-year basis. For 2021, the company expects global systemwide sales to grow in the range of 8-10%.

Factors to Note

Wendy’s remains well-positioned to achieve solid results in the upcoming quarter. COVID-19 restrictions loosening internationally is a factor, and a push towards the restaurant’s ever-developing breakfast menu is another.

In the first quarter of 2021, breakfast accounted for nearly 7% of sales. It also contributed significantly to restaurant average unit volumes (or AUV). Investors should note that the company expects the breakfast daypart sales to grow by 30% in 2021.

Another vital point that investors should take note of is the company’s growing global reach. Wendy’s plans involve a goal of almost 7,000 restaurants worldwide by the end of 2021, and 8,000 by the end of 2025.

The company’s international business is thus poised to be a driver of growth in the future.

Analyst Recommendations

On July 19, Stephens analyst James Rutherford of Stephens reiterated a Buy rating on the stock and increased the price target to $27 from $26. This implies 20.3% upside potential from current levels.

Consensus among analysts is a Moderate Buy based on 13 Buys and eight Holds. The average WEN price target of $26.50 implies 19.3% upside potential from the current levels.

Disclosure: Shalu Saraf held no position in any of the stocks mentioned in this article at the time of publication.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

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