Can Wendy’s Earnings Shift Sentiment in the Stock (NASDAQ: WEN)?

Wendy’s Company comes into earnings this morning with its stock price (NASDAQ: WEN) mildly off 52-week lows of $12.05 hit last month. With the stock down 22.5% YTD, 37.3% over the past 12 months, and 35% over 5 years, the question for any bulls now is whether the company can offer something in the latest quarter to shift the bearish trend that has held firm.

Consensus estimates call for earnings per share (EPS) of $0.20, down from $0.23 in the same quarter last year, and revenue of $526.63 million , reflecting a 2% year-over-year decline. Full-year guidance is similarly cautious, with management projecting adjusted EPS of $0.98–$1.02—just shy of the $1.04 analyst consensus.

Rising labor and commodity costs, particularly beef and wages, are squeezing margins. In Q4 2024, U.S. same-store sales growth slowed to 4.3% from 6.4% revenue growth, highlighting the pressure from inflation and a more cautious consumer. The company’s high debt-to-equity ratio of 12.48 further complicates the financial landscape, raising questions about balance sheet flexibility.

Yet, Wendy’s continues to reward shareholders with a solid dividend yield of 8.00% ($1.00 annualized), supported by a quick ratio of 1.83. While the payout ratio has crept above 100%, management remains committed to dividend sustainability, buoyed by ongoing buybacks ($325 million planned for 2025).

From a valuation perspective, Wendy’s trades at a forward P/E ratio of 13.16, a steep discount to peers like McDonald’s (26.81) and Chipotle (44.04).

Analyst opinions are mixed. UBS has trimmed its price target from $16.00 to $14.00, citing macroeconomic uncertainties, while Argus has upgraded the stock to “strong-buy” based on attractive valuation metrics. The consensus rating remains “Hold,” with an average target price of $17.58, reflecting both the risks and potential embedded in Wendy’s turnaround efforts.

What Comes Next for Wendy's?

Despite near-term headwinds, Wendy’s is not standing still. The company’s 2025 strategy zeroes in on menu innovation, value-driven promotions, and digital engagement. The “Free Fries Fridays” campaign, extended through 2025, is designed to drive app usage and loyalty program participation, building on modest same-store sales gains in 2024.

On the expansion front, Wendy’s plans to grow its global footprint by 3–4% annually, targeting 8,100–8,300 restaurants by 2028. Management is also eyeing systemwide sales growth of 5–6% and adjusted EBITDA growth of 7–8% over the next three years, underpinned by international expansion and real estate optimization.

Wendy’s faces stiff competition from industry heavyweights. McDonald’s, for instance, posted stronger same-store sales growth in Q1 2025, highlighting the challenge of winning market share in a cautious consumer environment. Persistent inflation, particularly in protein costs, continues to weigh on margins, with Wendy’s responding by implementing selective price increases.

The persistent stock decline reflects a confluence of macroeconomic challenges, conservative earnings guidance, and execution risks in its growth strategy. However, the company’s high dividend yield, undervaluation relative to peers, and strategic focus on high-margin categories provide a counterbalance.

Recent earnings' have been decidedly mixed, with both two beats and misses on EPS and revenue over the past year. It may take a sustained period of operational outperformance to shift the longer term narrative, although in the short-term, markets are expecting a stock price movement of ~9% post earnings.