Wendy’s (NASDAQ:WEN) shares are under pressure today after the quick-service restaurant operator’s fourth-quarter results failed to beat estimates. Revenue of $540.7 million lagged expectations by $5.8 million. Further, EPS of $0.21 missed the cut by $0.02.
In Q4, global systemwide sales rose by 3.2%, with a solid 9.7% increase in the International vertical. Global same-restaurant sales growth stood at 1.3%. Additionally, the company opened nearly 250 new restaurants in 2023.
For the full year, total revenue increased by 4.1% to $2.18 billion due to gains in franchise royalty, advertising funds, and company-operated restaurant revenue. Further, net income expanded by 15.2% to $204.4 million. Notably, Wendy’s free cash flow improved by 28.7% to $274.3 million during this period.
For Fiscal Year 2024, Wendy’s anticipates a 5% to 6% growth in its global systemwide sales. Adjusted EPS for the year is seen landing between $0.98 and $1.02. With an eye on growth, the restaurant chain plans to invest $55 million in incremental breakfast advertising and nearly $45 million in digital initiatives, including digital menu boards at its outlets.
Separately, Wendy’s has announced a quarterly dividend of $0.25 per share. The WEN dividend is payable on March 15 to investors of record on March 1.
Is WEN a Good a Good Investment?
Overall, the Street has a Hold consensus rating on Wendy’s, and the average WEN price target of $21.50 implies a 17% potential upside in the stock. That’s after a nearly 15% slide in the company’s share price over the past year.
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