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Dismal Traffic & High Costs to Hurt Wendy's (WEN) Q1 Earnings
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The Wendy's Company (WEN - Free Report) is scheduled to report first-quarter 2020 results on May 6, before the opening bell. In the last-reported quarter, the company delivered a negative earnings surprise of 11.1%. However, it beat the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 9.5%.
How Are Estimates Placed?
The Zacks Consensus Estimate for first-quarter bottom line is pegged at 10 cents per share, indicating a decline from earnings of 14 cents recorded in the year-ago quarter. For revenues, the consensus mark is pegged at $412 million, suggesting an increase of 0.8% from the year-ago figure.
Let's take a look at how things have shaped up in the quarter.
The coronavirus pandemic is expected to have materially affected Wendy’s performance in the first quarter. In an operational update issued on Mar 22, the company announced that same-restaurant sales declined 20% due to the pandemic.
To contain the spread of the deadly virus, the company has closed its dine-in services and is operating only through pick-up and delivery. Notably, decline in store traffic due to the coronavirus outbreak in the second half of March is expected show on first-quarter 2020 results. Moreover, costs related to various sales-boosting initiatives, advertising expenses along with commodity inflation are expected to have affected margins in the to-be-reported quarter.
Nonetheless, initiatives like menu innovation, technological upgrades, international expansion and re-imaging of units are likely to have boosted the top line in the quarter. Also, its recent addition of Postmates as a delivery partner is likely to have contributed to revenues.
What Our Model Says
Our proven model does not predict an earnings beat for Wendy’s this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. But that's not the case here.
Earnings ESP: Wendy’s has an Earnings ESP of -12.64%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Dunkin' Brands Group, Inc. reported first-quarter fiscal 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Its adjusted earnings of 67 cents per share surpassed the consensus mark of 62 cents by 8%. Revenues rose 1.3% year over year to $323.1 million and beat the consensus mark of $309 million by 4.7%.
Yum China Holdings, Inc. (YUMC - Free Report) reported first-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Adjusted earnings of 16 cents compared favorably with the Zacks Consensus Estimate of a loss of 25 cents. However, the reported figure declined 72.9% from the year-ago quarter. Total quarterly revenues of $1,754 million beat the consensus mark of $1,145 million in the first quarter of 2020. However, the metric deteriorated 23.9% year over year. Excluding foreign currency translation, the top line fell 21% on a year-over-year basis.
Chipotle Mexican Grill, Inc. (CMG - Free Report) reported first-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Adjusted earnings of $3.08 per share surpassed the Zacks Consensus Estimate of $2.50. However, the bottom line declined 9.4% from $3.40 reported in the year-ago quarter. Further, quarterly revenues of $1.4 billion exceeded the consensus mark by 1.2% and rose 7.8% year over year as well.
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Dismal Traffic & High Costs to Hurt Wendy's (WEN) Q1 Earnings
The Wendy's Company (WEN - Free Report) is scheduled to report first-quarter 2020 results on May 6, before the opening bell. In the last-reported quarter, the company delivered a negative earnings surprise of 11.1%. However, it beat the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 9.5%.
How Are Estimates Placed?
The Zacks Consensus Estimate for first-quarter bottom line is pegged at 10 cents per share, indicating a decline from earnings of 14 cents recorded in the year-ago quarter. For revenues, the consensus mark is pegged at $412 million, suggesting an increase of 0.8% from the year-ago figure.
Let's take a look at how things have shaped up in the quarter.
The Wendy's Company Price and EPS Surprise
The Wendy's Company price-eps-surprise | The Wendy's Company Quote
Factors at Play
The coronavirus pandemic is expected to have materially affected Wendy’s performance in the first quarter. In an operational update issued on Mar 22, the company announced that same-restaurant sales declined 20% due to the pandemic.
To contain the spread of the deadly virus, the company has closed its dine-in services and is operating only through pick-up and delivery. Notably, decline in store traffic due to the coronavirus outbreak in the second half of March is expected show on first-quarter 2020 results. Moreover, costs related to various sales-boosting initiatives, advertising expenses along with commodity inflation are expected to have affected margins in the to-be-reported quarter.
Nonetheless, initiatives like menu innovation, technological upgrades, international expansion and re-imaging of units are likely to have boosted the top line in the quarter. Also, its recent addition of Postmates as a delivery partner is likely to have contributed to revenues.
What Our Model Says
Our proven model does not predict an earnings beat for Wendy’s this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. But that's not the case here.
Earnings ESP: Wendy’s has an Earnings ESP of -12.64%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Releases
Dunkin' Brands Group, Inc. reported first-quarter fiscal 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Its adjusted earnings of 67 cents per share surpassed the consensus mark of 62 cents by 8%. Revenues rose 1.3% year over year to $323.1 million and beat the consensus mark of $309 million by 4.7%.
Yum China Holdings, Inc. (YUMC - Free Report) reported first-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Adjusted earnings of 16 cents compared favorably with the Zacks Consensus Estimate of a loss of 25 cents. However, the reported figure declined 72.9% from the year-ago quarter. Total quarterly revenues of $1,754 million beat the consensus mark of $1,145 million in the first quarter of 2020. However, the metric deteriorated 23.9% year over year. Excluding foreign currency translation, the top line fell 21% on a year-over-year basis.
Chipotle Mexican Grill, Inc. (CMG - Free Report) reported first-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Adjusted earnings of $3.08 per share surpassed the Zacks Consensus Estimate of $2.50. However, the bottom line declined 9.4% from $3.40 reported in the year-ago quarter. Further, quarterly revenues of $1.4 billion exceeded the consensus mark by 1.2% and rose 7.8% year over year as well.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>