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What Should You Expect from Wendy's (WEN) in Q1 Earnings?
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Fast-food chain The Wendy’s Company (WEN - Free Report) is slated to release first-quarter 2017 results on May 10, before the market opens.
The company posted an 11.11% negative earnings surprise, previous quarter. However, prior to that, the company posted positive earnings surprise in each of the three trailing quarters, bringing the average surprise in the last four quarters to a positive 23.33%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
The fourth quarter of 2016 marked the 16th consecutive quarter of positive same-store sales growth for Wendy’s, indicating long-term strength and relevance of the brand. We expect the company to maintain the trend in the first quarter, through its solid menu pipeline, limited time offers (LTO), marketing initiatives and increased emphasis on core and price value offerings.
Additionally, increased investments in technology like mobile payment, mobile ordering and customer self-order kiosks should quicken service, resulting in increased customer count. Meanwhile, re-imaging of restaurants is expected to increase traffic and drive higher sales.
We note that Wendy’s has been witnessing year over year revenue decline over the past few quarters due to reduced number of company-operated restaurants, resulting from the company’s system optimization initiative. However, as the initiative was completed last quarter, Wendy’s expects the same to lower G&A expenses and boost earnings 2017 onward. Nonetheless, it remains to be seen if the company could realize the benefits in the first quarter of 2017 itself.
Meanwhile, increased costs related to other sales-boosting initiatives and persistent higher wages, could weigh on margins in the quarter. Further, a soft consumer spending environment in the U.S. restaurant space might further hurt traffic and thereby comps in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show earnings beat for Wendy’s this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #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: Earnings ESP for Wendy’s stands at 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 8 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Wendy's has a Zacks Rank #4 (Sell).
We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks to Consider
Here are some companies in the broader Retail-Wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2.
Fred’s, Inc. has an Earnings ESP of +16.67% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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What Should You Expect from Wendy's (WEN) in Q1 Earnings?
Fast-food chain The Wendy’s Company (WEN - Free Report) is slated to release first-quarter 2017 results on May 10, before the market opens.
The company posted an 11.11% negative earnings surprise, previous quarter. However, prior to that, the company posted positive earnings surprise in each of the three trailing quarters, bringing the average surprise in the last four quarters to a positive 23.33%.
Wendy's Company (The) Price and EPS Surprise
Wendy's Company (The) Price and EPS Surprise | Wendy's Company (The) Quote
Let’s see how things are shaping up for this announcement.
Factors to Consider
The fourth quarter of 2016 marked the 16th consecutive quarter of positive same-store sales growth for Wendy’s, indicating long-term strength and relevance of the brand. We expect the company to maintain the trend in the first quarter, through its solid menu pipeline, limited time offers (LTO), marketing initiatives and increased emphasis on core and price value offerings.
Additionally, increased investments in technology like mobile payment, mobile ordering and customer self-order kiosks should quicken service, resulting in increased customer count. Meanwhile, re-imaging of restaurants is expected to increase traffic and drive higher sales.
We note that Wendy’s has been witnessing year over year revenue decline over the past few quarters due to reduced number of company-operated restaurants, resulting from the company’s system optimization initiative. However, as the initiative was completed last quarter, Wendy’s expects the same to lower G&A expenses and boost earnings 2017 onward. Nonetheless, it remains to be seen if the company could realize the benefits in the first quarter of 2017 itself.
Meanwhile, increased costs related to other sales-boosting initiatives and persistent higher wages, could weigh on margins in the quarter. Further, a soft consumer spending environment in the U.S. restaurant space might further hurt traffic and thereby comps in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show earnings beat for Wendy’s this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #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: Earnings ESP for Wendy’s stands at 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 8 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Wendy's has a Zacks Rank #4 (Sell).
We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks to Consider
Here are some companies in the broader Retail-Wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2.
Jack in the Box, Inc. (JACK - Free Report) has an Earnings ESP of +4.40% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fred’s, Inc. has an Earnings ESP of +16.67% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>