It’s been a jam-packed earnings season, perhaps one of the most critical in recent times. It goes without saying that we’ve found ourselves in a highly unique economic environment after coming out of a once-in-a-lifetime pandemic.

The market rallied spectacularly in July, providing investors with much-needed relief. A vast majority of Zacks Industries have also performed well over the last month, such as the Zacks Retail – Restaurants Industry.  

Below is a table illustrating the industry’s performance over several timeframes compared to the S&P 500. 

Image Source: Zacks Investment Research

One highly-recognized company in the industry, The Wendy’s Company (WEN Quick QuoteWEN - Free Report) , is on deck to report Q2 2022 results before market open on August 10^th.

The Wendy's Company, the world’s third-largest quick-service restaurant company, operates through its subsidiary holding company — Wendy’s Restaurants, LLC. We see their restaurants seemingly at every turn.

How does the fast-food giant stack up heading into the quarterly print? Let’s take a closer look.

Share Performance & Valuation

Wendy’s shares have carried a higher layer of valuable defense than the general market year-to-date, but shares have still declined 10.5% overall.

Image Source: Zacks Investment Research

However, over the past three months, WEN shares have tacked on a stellar 17%, easily outperforming the S&P 500 in this timeframe.

Image Source: Zacks Investment Research

The recent relative price strength signals that buyers have been out in full force.

Wendy’s carries a forward earnings multiple on the higher side at 25.7X, but the value is still well below its five-year median of 31.0X and represents a slight 4% discount relative to its Zacks Industry.

WEN sports a Style Score of a C for Value.

Image Source: Zacks Investment Research

Quarterly Estimates

Two of the three analyst estimate revisions that have come in over the last 60 days have been downward. In addition, the Zacks Consensus EPS Estimate of $0.22 reflects an 18.5% decrease in quarterly earnings year-over-year.

Image Source: Zacks Investment Research

However, the Zacks Consensus Sales Estimate of $541 million pencils in a rock-solid 9.7% expansion within the top-line from year-ago quarterly sales of $493 million.

Rising labor and product costs have significantly nibbled away at the company’s margins, helping explain why the bottom-line projection alludes to such a steep decrease.

Quarterly Performance & Market Reactions

Wendy’s has primarily reported bottom-line results above the Zacks Consensus EPS Estimate, registering six bottom-line beats over its last ten quarters. Although, the company recorded a 5.5% bottom-line miss in its latest quarter.

Quarterly revenue numbers have typically come in less than expected; over the last ten quarters, WEN has recorded just four top-line beats. Below is a chart illustrating the company’s revenue on a quarterly basis.

Image Source: Zacks Investment Research

An important note for day-traders – over WEN’s last six quarterly prints, shares have moved downwards following the release in five instances.

Putting Everything Together

WEN shares have been hot over the last three months but are still well in the red year-to-date. In addition, the company carries solid valuation levels relative to its Zacks Sector.

The company’s bottom-line is forecasted to decrease notably. Still, the top-line looks to register solid growth – a reflection of the margin compression the company has faced in 2022 with soaring costs.

Quarterly sales numbers have typically come in below expectations over its last ten prints, but the company has shown some consistency within its bottom-line results.

Heading into the print, The Wendy’s Company (WEN Quick QuoteWEN - Free Report) carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of 1.1%.