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What's in Store for Wendy's (WEN) this Earnings Season?
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The Wendy's Company (WEN - Free Report) is set to report second-quarter 2015 results on Aug 9. Last quarter, it posted a positive earnings surprise of 83.33%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Though the company’s bottom line has improved due to its cost-saving initiatives, the top line has been a drag for quite some time. In fact, the company’s revenues missed the consensus mark over the past few quarters. The system optimization initiative (completed in Mar 2015) has been affecting revenues. This initiative called for transition to a franchise-based model. Per this initiative, the company sold its 418 company-operated restaurants to various franchisees. Though the initiative is complete, these franchise-based models would not generate the same amount of sales for the company as a company-owned restaurant. Therefore, we do not expect revenues to improve much this quarter.
We also anticipate margins to be hurt by the recent increase in beef prices and other commodities. Currently, beef prices are soaring and have hit their highest level in almost three decades.
However, international expansion, refurbishment of units, and an extensive menu bode well for the company and should offset the negative impacts to some extent.
Our proven model does not conclusively show that Wendy’s is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP:The Earnings ESP for Wendy’s is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 9 cents.
Zacks Rank:Wendy’s carries a Zacks Rank #4 (Sell). Note that the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are some restaurant stocks that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Carrol’s Restaurant (TAST - Free Report) with an Earnings ESP of +4.35% and a Zacks Rank #3.
Dave & Buster’s Entertainment, Inc. (PLAY - Free Report) with an Earnings ESP of +2.27% and a Zacks Rank #1.
McDonald’s Corporation (MCD - Free Report) with an Earnings ESP of +0.68% and a Zacks Rank #3.
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What's in Store for Wendy's (WEN) this Earnings Season?
The Wendy's Company (WEN - Free Report) is set to report second-quarter 2015 results on Aug 9. Last quarter, it posted a positive earnings surprise of 83.33%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Though the company’s bottom line has improved due to its cost-saving initiatives, the top line has been a drag for quite some time. In fact, the company’s revenues missed the consensus mark over the past few quarters. The system optimization initiative (completed in Mar 2015) has been affecting revenues. This initiative called for transition to a franchise-based model. Per this initiative, the company sold its 418 company-operated restaurants to various franchisees. Though the initiative is complete, these franchise-based models would not generate the same amount of sales for the company as a company-owned restaurant. Therefore, we do not expect revenues to improve much this quarter.
We also anticipate margins to be hurt by the recent increase in beef prices and other commodities. Currently, beef prices are soaring and have hit their highest level in almost three decades.
However, international expansion, refurbishment of units, and an extensive menu bode well for the company and should offset the negative impacts to some extent.
WENDYS CO/THE Price and EPS Surprise
WENDYS CO/THE Price and EPS Surprise | WENDYS CO/THE Quote
Earnings Whispers?
Our proven model does not conclusively show that Wendy’s is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP:The Earnings ESP for Wendy’s is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 9 cents.
Zacks Rank:Wendy’s carries a Zacks Rank #4 (Sell). Note that the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are some restaurant stocks that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Carrol’s Restaurant (TAST - Free Report) with an Earnings ESP of +4.35% and a Zacks Rank #3.
Dave & Buster’s Entertainment, Inc. (PLAY - Free Report) with an Earnings ESP of +2.27% and a Zacks Rank #1.
McDonald’s Corporation (MCD - Free Report) with an Earnings ESP of +0.68% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download7 Best Stocks for the Next 30 Days. Click to get this free report >>