WEN Stock, IBD Stock Of The Day, Rebounds Powerfully On Strong Sales, Dividend Hike

Wendy’s Co

Wendy’s Co

WEN

$1.30


5.97%


161%

IBD Stock Analysis

• Wendy’s is a buy on big upside reversal, above 50-day and trendline.
• New flat base is just above a prior base.
• Sales growth accelerating for 4th straight quarter

Composite Rating

Industry Group Ranking

Emerging Pattern

Flat Base

* Not real-time data. All data shown was captured at
1:28PM EST on
01/13/2023.

WEN stock is the IBD Stock Of The Day as the burger chain rebounded powerfully off a key technical level, snapping a recent downtrend to offer an early entry.

X

On Friday, Wendy’s (WEN) preannounced Q4 results that showed a 20% increase in adjusted EBITDA on a 13.4% revenue gain. That marks the highest sales growth in six quarters, and the fourth straight quarter of accelerating gains, just topping Q3’s 13.2%.

The board of the Dublin, Ohio-based company approved doubling its quarterly dividend to 25 cents and spending $500 million on share buybacks.

Wendy’s also reported a 6% rise in same-store sales and expanding margins.

In addition, the restaurant operator announced a broader organizational redesign and several executive departures as part of its long-term growth strategy.

In a separate regulatory filing, activist investor Nelson Peltz’s Trian Fund Management said it won’t pursue a Wendy’s takeover bid. In May, the hedge fund said it was exploring a potential deal. Trian is the fast-food chain’s largest shareholder and Peltz serves as board chair.

Trian initially invested in Wendy’s in 2005 and started a push for change in 2008.

IBD Live: A New Tool For Daily Stock Market Analysis

Wendy’s Stock Ratings Solid

The Stock Checkup tool shows that WEN stock earns a strong 85 IBD Composite Rating, out of a best-possible 99. It has an RS Rating of 73 out of 99.

Its EPS Rating is a superior 84.

The FactSet analyst consensus rating on WEN stock is overweight, with a consensus price target of $23.87, a price level Wendy’s shares almost reached Friday after jumping on the Q4 preannouncement.

WEN Stock

Shares of Wendy’s jumped 6% to 23.08 in big volume on the stock market today, a big upside reversal from an intraday low of 21.36.

WEN stock rebounded above the 50-day moving average and reclaimed the 21-day line. Wendy’s stock is also breaking a recent downtrend.

At Friday’s lows, WEN stock briefly undercut a 21.59 cup-with-handle buy point from a prior base.

Wendy’s stock should have a flat base with a 23.88 entry at Friday’s close.

Friday’s action can be seen as an early entry from that emerging consolidation or as a first 50-day line test from the prior base.

The relative strength line for WEN stock surged for much of 2022, the MarketSmith chart shows. That strength indicator has pulled back a bit from December highs. A rising RS line means that a stock is outperforming vs. the S&P 500.

The 81 Relative Strength Rating means that WEN stock has outperformed 81% of all stocks in IBD’s database over the past year.

McDonald’s (MCD) bears an RS Rating of 75 while Yum China (YUMC) sports a 94.

Market Breaks Past Resistance; Tesla’s Painful Transition

Wendy’s Earnings

Recent Wendy’s earnings have been volatile. The company posted EPS declines in the first two quarters of 2022, followed by a 26% gain in Q3.

Revenue growth accelerated from 6% to 9% to 13% over this period. That compares favorably with McDonald’s, whose revenue growth fell from nearly 19% in Q1 to 8% in Q2 and dropping into negative territory in Q3.

Despite a tough first half, Wall Street expects Wendy’s earnings to rise 3.7% in all of 2022, following a big 44% rebound in 2021.

Analysts expect Wendy’s earnings growth to accelerate to 14.6% next year. But revenue growth is seen slowing to 3.3% in 2023 from 10.5% in 2022.

Wendy’s makes its official Q4 report on March 1.

In the past year, WEN stock fell 3.2% vs. a 14.8% decline for the S&P 500 index. Wendy’s stock has rallied nearly 22% from its late September low.

YOU MAY ALSO LIKE:

These Are The 5 Best Stocks To Buy And Watch Now

Stocks To Watch: Top-Rated IPOs, Big Caps And Growth Stocks

Find The Latest Stocks Hitting Buy Zones With MarketSmith

Why This IBD Tool Simplifies The Search For Top Stocks

Looking For The Next Big Stock Market Winners? Start With These 3 Steps