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Wendy's (WEN) to Post Q1 Earnings: What's in the Offing?

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The Wendy's Company (WEN - Free Report) is scheduled to report first-quarter 2021 results on May 12, before the opening bell. In the last reported quarter, its earnings and revenues missed the Zacks Consensus Estimate. However, the bottom and the top line grew year over year.

How Are Estimates Placed?

The Zacks Consensus Estimate for its first-quarter earnings line is pegged at 14 cents per share, indicating growth of 55.6% from 9 cents registered in the year-ago quarter.

For revenues, the consensus mark is pegged at $444.1 million, suggesting an increase of 9.7% from the year-ago quarter’s figure.

Factors at Play

Wendy’s first-quarter 2021 results are likely to reflect robust performance of its breakfast business. Notably, the company’s continuous focus to extend its breakfast daypart offerings is likely to have driven the first-quarter top line. Moreover, Wendy’s first-quarter margins are likely to be supported by an accelerated digital business.

Furthermore, Wendy’s is benefiting from its transition to a franchised business model. During the quarter to be reported, the company’s margins are expected to expand on a rise in sales at company-operated restaurants and an increase in franchise royalty revenues and fees. This along with innovation, promotional offers and brand transformation initiative is likely to have positively impacted first-quarter results.

The Zacks Consensus Estimate for Franchise royalty revenue and fees is pegged at $112 million, indicating 9.8% growth year over year. The consensus estimate for Advertising funds revenues is pegged at $100 million, indicating growth of 26.6% year over year.

However, the coronavirus pandemic is expected to materially affect the company's operating and financial results during the first quarter. The customer count is likely to remain low for the quarter to be reported.

The Wendys Company Price and EPS Surprise

 

The Wendys Company Price and EPS Surprise

The Wendys Company price-eps-surprise | The Wendys Company Quote

What Our Model Indicates

Our proven model conclusively predicts an earnings beat for Wendy’s this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Earnings ESP for Wendy’s is +2.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

Here are some other companies in the Zacks Retail and Wholesale sector, which according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Big Lots, Inc. (BIG - Free Report) has an Earnings ESP of + 35.40% and a Zacks Rank #3.

Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +16.28% and a Zacks Rank #3.

Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) has an Earnings ESP of +15.97% and a Zacks Rank #3.

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