We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wendy's (WEN) Q2 Earnings and Revenues Lag Estimates
Read MoreHide Full Article
The Wendy’s Company (WEN - Free Report) reported dismal second-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, the top line rose while the bottom line declined. Solid same-restaurant sales and strength in U.S. breakfast sales and digital sales momentum aided the company’s performance.
The company continues to focus on industry-leading quality, innovation and value. It aims to maintain a customer-first approach while driving its restaurant economic model throughout the year and beyond.
Following the announcement, the stock moved up 0.2% during the trading session on Aug 1, 2024.
Q2 Earnings & Revenues
WEN reported adjusted earnings per share (EPS) of 27 cents, missing the Zacks Consensus Estimate of 28 cents. In the prior-year quarter, it reported adjusted EPS of 28 cents.
Revenues of $570.7 million missed the consensus mark of $577.3 million. However, the top line inched up 1.6% on a year-over-year basis on the back of net new restaurant development and higher same-restaurant sales. Also, a rise in franchise royalty revenues and advertising funds revenues added to the upside.
The Wendy's Company Price, Consensus and EPS Surprise
Same-restaurant sales at international restaurants (excluding Argentina) rose 2.5% year over year compared with 7.2% a year ago. Our estimate was pegged at 2.1%.
Comps at global restaurants inched up 0.8% year over year compared with 5.1% in the prior-year quarter. Comps in the United States registered a 0.6% year-over-year improvement compared with 4.9% in the year-ago quarter.
In the quarter under review, Wendy’s inaugurated 64 restaurants globally, marking an increase of 13 net new units.
System-Wide Sales Discussion
During the reported quarter, global system-wide sales — including company-operated and franchise restaurants — rose 2.6% year over year. System-wide sales in the U.S. and International segments were up 1.7% and 8.3% year over year, respectively.
Operating Highlights
During the quarter under review, the company-operated restaurant margin came in at 16.5% compared with 17.3% in the prior-year quarter. The downside was due to higher labor costs and reduced customer count, though this was partly offset by an increased average check.
General and administrative expenses were $61.5 million compared with $62.7 million a year ago. The downside was caused by reduced incentive compensation accruals and lower outside professional services, driven by the previous year’s costs for implementing the company’s human capital management system. This was partially offset by an increase in employee compensation and benefits. We projected the metric to be $68.6 million.
Quarterly operating profit amounted to $99.5 million, down 9% from the year-ago levels. The downside was caused by incremental investment in breakfast advertising, higher depreciation, higher amortization of cloud-computing arrangement costs and lower U.S. company-operated restaurant margin. However, this was partially offset by higher franchise royalty revenues and an increase in U.S. company-operated restaurant margin.
Net income was $54.6 million, down 8.4% from $59.6 million in the year-ago quarter.
Adjusted EBITDA totaled $143.1 million, down 1% from $144.5 million in the prior-year quarter. The downtick was primarily due to an incremental investment in breakfast advertising, higher depreciation, higher amortization of cloud-computing arrangement costs and lower U.S. company-operated restaurant margin. This was partially offset by higher franchise royalty revenues and lower general and administrative expenses. Our projection was $141.3 million.
Balance Sheet
Cash and cash equivalents as of Jun 30, 2024, totaled $465.5 million compared with $516 million on Dec 31, 2023. Inventories at the end of the fiscal second quarter amounted to $6.4 million compared with $6.7 million as of Dec 31, 2023. As of Jun 30, 2024, long-term debt was $2.72 billion compared with $2.73 billion at the end of Dec 31, 2023.
Management declared a quarterly dividend of 25 cents per share. The dividend will be paid out on Sep 17, 2024, to shareholders on record as of Sep 3, 2024.
2024 Outlook Revised
For 2024, WEN expects global system-wide sales growth in the range of 3-5% compared with the prior estimate of 5-6%. Adjusted EBITDA is still projected in the band of $535-$545 million.
Adjusted EPS for 2024 is anticipated to be between 98 cents and $1.02. The Zacks Consensus Estimate is pegged at 99 cents.
The company suggests cash flow from operations in the band of $365-$385 million compared with the prior estimate of $370-$390. Capital expenditures are envisioned to be between $90 million and $100 million. Free cash flow is forecast in the range of $275-$285 million compared with the prior estimate of $280-$290 million.
Starbucks Corporation (SBUX - Free Report) reported mixed third-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line declined on a year-over-year basis. The downside was caused by the competitive market dynamics in China, macro challenges and price wars.
In the fiscal third quarter, the company reported adjusted EPS of 93 cents, in line with the Zacks Consensus Estimate. The bottom line declined 7% year over year from $1.00. Quarterly revenues of $9,113.9 million missed the Zacks Consensus Estimate of $9,224 million. The top line dropped 0.6% on a year-over-year basis due to dismal international revenues. Global comparable store sales declined 3% year over year. The downside was backed by a decline of 5% in comparable transactions, partially overshadowed by a 2% increase in average tickets.
Chipotle Mexican Grill, Inc. (CMG - Free Report) released impressive second-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. During the quarter, the company benefited from successful promotions regarding Chicken Al Pastor driving significant engagement and sales. Also, the emphasis on throughput and staff training proved effective in meeting heightened demand and supported transaction growth.
During the second quarter, CMG reported adjusted EPS of 34 cents, outpacing the Zacks Consensus Estimate of 31 cents. The bottom line increased 36% from 25 cents reported in the year-ago quarter. Quarterly revenues of $2.97 billion surpassed the consensus mark of $2.94 billion by 1.3%. The top line rose 18.2% on a year-over-year basis. The upside was driven by strong comparable restaurant sales growth backed by increased transactions (8.7%) and average checks (2.4%).
McDonald's Corporation (MCD - Free Report) reported drab second-quarter 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and the bottom line declined on a year-over-year basis. The dismal performance was caused by a pressured industry landscape and the war in the Middle East.
During the second quarter, McDonald's reported adjusted EPS of $2.97, missing the Zacks Consensus Estimate of $3.08. Adjusted earnings fell 6% year over year. Quarterly net revenues of $6,490 million lagged the consensus mark of $6,651 million. The top line dropped 0.1% year over year. Global comps declined 1% against 11.7% growth in the prior-year quarter.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Wendy's (WEN) Q2 Earnings and Revenues Lag Estimates
The Wendy’s Company (WEN - Free Report) reported dismal second-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, the top line rose while the bottom line declined. Solid same-restaurant sales and strength in U.S. breakfast sales and digital sales momentum aided the company’s performance.
The company continues to focus on industry-leading quality, innovation and value. It aims to maintain a customer-first approach while driving its restaurant economic model throughout the year and beyond.
Following the announcement, the stock moved up 0.2% during the trading session on Aug 1, 2024.
Q2 Earnings & Revenues
WEN reported adjusted earnings per share (EPS) of 27 cents, missing the Zacks Consensus Estimate of 28 cents. In the prior-year quarter, it reported adjusted EPS of 28 cents.
Revenues of $570.7 million missed the consensus mark of $577.3 million. However, the top line inched up 1.6% on a year-over-year basis on the back of net new restaurant development and higher same-restaurant sales. Also, a rise in franchise royalty revenues and advertising funds revenues added to the upside.
The Wendy's Company Price, Consensus and EPS Surprise
The Wendy's Company price-consensus-eps-surprise-chart | The Wendy's Company Quote
Same-restaurant sales at international restaurants (excluding Argentina) rose 2.5% year over year compared with 7.2% a year ago. Our estimate was pegged at 2.1%.
Comps at global restaurants inched up 0.8% year over year compared with 5.1% in the prior-year quarter. Comps in the United States registered a 0.6% year-over-year improvement compared with 4.9% in the year-ago quarter.
In the quarter under review, Wendy’s inaugurated 64 restaurants globally, marking an increase of 13 net new units.
System-Wide Sales Discussion
During the reported quarter, global system-wide sales — including company-operated and franchise restaurants — rose 2.6% year over year. System-wide sales in the U.S. and International segments were up 1.7% and 8.3% year over year, respectively.
Operating Highlights
During the quarter under review, the company-operated restaurant margin came in at 16.5% compared with 17.3% in the prior-year quarter. The downside was due to higher labor costs and reduced customer count, though this was partly offset by an increased average check.
General and administrative expenses were $61.5 million compared with $62.7 million a year ago. The downside was caused by reduced incentive compensation accruals and lower outside professional services, driven by the previous year’s costs for implementing the company’s human capital management system. This was partially offset by an increase in employee compensation and benefits. We projected the metric to be $68.6 million.
Quarterly operating profit amounted to $99.5 million, down 9% from the year-ago levels. The downside was caused by incremental investment in breakfast advertising, higher depreciation, higher amortization of cloud-computing arrangement costs and lower U.S. company-operated restaurant margin. However, this was partially offset by higher franchise royalty revenues and an increase in U.S. company-operated restaurant margin.
Net income was $54.6 million, down 8.4% from $59.6 million in the year-ago quarter.
Adjusted EBITDA totaled $143.1 million, down 1% from $144.5 million in the prior-year quarter. The downtick was primarily due to an incremental investment in breakfast advertising, higher depreciation, higher amortization of cloud-computing arrangement costs and lower U.S. company-operated restaurant margin. This was partially offset by higher franchise royalty revenues and lower general and administrative expenses. Our projection was $141.3 million.
Balance Sheet
Cash and cash equivalents as of Jun 30, 2024, totaled $465.5 million compared with $516 million on Dec 31, 2023. Inventories at the end of the fiscal second quarter amounted to $6.4 million compared with $6.7 million as of Dec 31, 2023. As of Jun 30, 2024, long-term debt was $2.72 billion compared with $2.73 billion at the end of Dec 31, 2023.
Management declared a quarterly dividend of 25 cents per share. The dividend will be paid out on Sep 17, 2024, to shareholders on record as of Sep 3, 2024.
2024 Outlook Revised
For 2024, WEN expects global system-wide sales growth in the range of 3-5% compared with the prior estimate of 5-6%. Adjusted EBITDA is still projected in the band of $535-$545 million.
Adjusted EPS for 2024 is anticipated to be between 98 cents and $1.02. The Zacks Consensus Estimate is pegged at 99 cents.
The company suggests cash flow from operations in the band of $365-$385 million compared with the prior estimate of $370-$390. Capital expenditures are envisioned to be between $90 million and $100 million. Free cash flow is forecast in the range of $275-$285 million compared with the prior estimate of $280-$290 million.
Zacks Rank
Wendy's currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Retail-Wholesale Releases
Starbucks Corporation (SBUX - Free Report) reported mixed third-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line declined on a year-over-year basis. The downside was caused by the competitive market dynamics in China, macro challenges and price wars.
In the fiscal third quarter, the company reported adjusted EPS of 93 cents, in line with the Zacks Consensus Estimate. The bottom line declined 7% year over year from $1.00. Quarterly revenues of $9,113.9 million missed the Zacks Consensus Estimate of $9,224 million. The top line dropped 0.6% on a year-over-year basis due to dismal international revenues. Global comparable store sales declined 3% year over year. The downside was backed by a decline of 5% in comparable transactions, partially overshadowed by a 2% increase in average tickets.
Chipotle Mexican Grill, Inc. (CMG - Free Report) released impressive second-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. During the quarter, the company benefited from successful promotions regarding Chicken Al Pastor driving significant engagement and sales. Also, the emphasis on throughput and staff training proved effective in meeting heightened demand and supported transaction growth.
During the second quarter, CMG reported adjusted EPS of 34 cents, outpacing the Zacks Consensus Estimate of 31 cents. The bottom line increased 36% from 25 cents reported in the year-ago quarter. Quarterly revenues of $2.97 billion surpassed the consensus mark of $2.94 billion by 1.3%. The top line rose 18.2% on a year-over-year basis. The upside was driven by strong comparable restaurant sales growth backed by increased transactions (8.7%) and average checks (2.4%).
McDonald's Corporation (MCD - Free Report) reported drab second-quarter 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and the bottom line declined on a year-over-year basis. The dismal performance was caused by a pressured industry landscape and the war in the Middle East.
During the second quarter, McDonald's reported adjusted EPS of $2.97, missing the Zacks Consensus Estimate of $3.08. Adjusted earnings fell 6% year over year. Quarterly net revenues of $6,490 million lagged the consensus mark of $6,651 million. The top line dropped 0.1% year over year. Global comps declined 1% against 11.7% growth in the prior-year quarter.