The Wendy's Company (WEN - Free Report) is planning to launch its breakfast menu across the United States by the next year. At present, the breakfast menu is available in more than 300 restaurants nationwide.
President and CEO of The Wendy's, Todd Penegor, stated that “We are well-positioned to pursue it. We believe we have the right team and structure in place, and we put Wendy's fan favorites on our breakfast menu to set us apart from the competition.”
According to Wendy's, it will spend around $20 million for the roll out of the breakfast menu. In fact, the company has trimmed its 2019 guidance due to the investment in breakfast plans. Wendy's now expects adjusted EBITDA to be in the range of flat to down 2% compared with the prior estimate of growth of roughly 2.5-4.5% year over year. Adjusted earnings are now anticipated to be down 3.5-6.5% against the prior estimate of growth of 3.5-7%.
Moreover, the company expects cash flows from operations of nearly $290-$305 million and free cash flow of roughly $215-$225 million. However, the company continues to anticipate global system-wide sales growth of 3-4%.
Following the guidance cut, Wendy's declined nearly 2% on Sep 9. However, the stock has surged 26.4% year to date, compared with the industry’s 29.9% rally.
This Zacks Rank #3 (Hold) company’s brand transformation initiative is an added positive. This initiative includes menu innovation, promotional offers and bold new packaging, intended to drive sales.
Meanwhile, the practice of offering customized sandwiches made on order and serving hamburgers made of never-frozen beef are consistently bolstering the company’s top-line performance. We expect the company’s solid menu pipeline, limited time offers (LTO), marketing initiatives and increased emphasis on core and price value offerings to help maintain the trend.
Better-ranked stocks worth considering in the same space include Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , Dunkin' Brands Group, Inc. (DNKN - Free Report) and Shake Shack Inc. (SHAK - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dave & Buster's Entertainment, Dunkin' Brands and Shake Shack have an impressive long-term earnings growth rate of 14.8%, 10.9% and 22.5%, respectively.
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