Wendy's (WEN) AI Stock Analysis

• Market Cap: $1.94B
• Dividend Yield: 7.55%
• Average Volume (3M): 6.47M
• Price to Earnings (P/E): 10.6
• Beta (1Y): 0.31
• Revenue Growth: 1.31%
• EPS Growth: -1.46%
• Country: US
• Employees: 4,833
• Sector: Consumer Cyclical
• Sector Strength: 83
• Industry: Restaurants
• EPS (TTM): 0.29
• Shares Outstanding: 190,565,100
• 10 Day Avg. Volume: 5,110,857
• 30 Day Avg. Volume: 6,473,545
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 3.04
• Enterprise Value/Revenue: 2.65
• Enterprise Value/Gross Profit: 8.86
• Enterprise Value/Ebitda: 11.33
• 1Y Price Target: $11.95
• Price Target Upside: 15.68% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 20

• Rating: 63 Neutral
• Price Target: $11.50 ▲(11.33% Upside)

Wendy's overall stock score reflects a balance of stable profitability and attractive valuation against challenges in revenue growth and U.S. market performance. Strong international growth and strategic initiatives provide a positive outlook, but high leverage and domestic market pressures remain concerns.

Positive Factors

Financial Stability

Valuation on lowered expectations protects further downside with a current 8-8.5% yield on estimated future free cash flow, suggesting some level of financial stability.

International Growth

International markets continue to be the bright spot, with international SWS growth at 8.7% and +1.8% SSS suggesting that the brand has the potential to penetrate in more geographies.

Menu Innovation

Management's effort to swiftly address the traffic declines with new menu innovation, including chicken tenders and beverages planned, is applauded.

Negative Factors

Advertising Budget

The lower 2H25 advertising budget due to underperforming sales will leave sales pressured as burger competitors amplify value & innovation efforts.

Competitive Pressure

Wendy's is facing competitive pressure from McDonald's, which is determined to take market share.

Sales Decline

QTD trends appear to be slower with July down 5-6%, indicating potential for lower global system sales growth.

Wendy's Business Overview & Revenue Model

Company Description

The Wendy's Company, together with its subsidiaries, operates as a quick-service restaurant company. It operates through three segments: Wendy's U.S., Wendy's International, and Global Real Estate & Development. The company is involved in operating, developing, and franchising a system of quick-service restaurants specializing in hamburger sandwiches. As of January 2, 2022, it operated approximately 403 company-operated restaurants; 5,535 franchised restaurants in the United States; and 1,006 franchised restaurants internationally. The company also owns and leases real estate properties. It owns 485 and leases 1,235 properties, which are leased or subleased to franchisees. The company was formerly known as Wendy's/Arby's Group, Inc. and changed its name to The Wendy's Company in July 2011. The Wendy's Company was founded in 1969 and is headquartered in Dublin, Ohio.

How the Company Makes Money

Wendy's generates revenue primarily through the sale of food and beverages from its company-operated and franchised restaurants. The revenue model consists of two main streams: company-operated restaurant sales and franchise fees. Company-operated locations contribute directly to revenue through sales of menu items, while franchised locations pay Wendy's a percentage of their sales as royalties, along with initial franchise fees and ongoing service fees. Additionally, Wendy's benefits from strategic partnerships, such as collaborations with third-party delivery services, enhancing customer reach and convenience. Marketing initiatives and promotional campaigns also play a vital role in driving sales and strengthening brand loyalty, thereby contributing to overall revenue growth.

Wendy's Financial Statement Overview

Summary

Wendy's financial performance is mixed. The income statement shows stable profitability margins but a concerning decline in revenue growth. The balance sheet indicates high leverage, increasing financial risk, while cash flow remains strong, providing some stability. Overall, the company needs to address revenue growth and leverage issues.

Income Statement

Wendy's income statement shows a mixed performance. The TTM data indicates a decline in revenue growth rate by 43.8%, which is concerning. However, the company maintains a stable net profit margin of 8.63% and a reasonable EBIT margin of 16.37%. The gross profit margin has decreased slightly from previous periods, indicating potential cost pressures. Overall, while profitability metrics remain stable, the significant drop in revenue growth is a key area of concern.

Balance Sheet

The balance sheet reveals high leverage with a debt-to-equity ratio of 36.21 in the TTM period, which is significantly higher than previous years, indicating increased financial risk. Return on equity is low at 1.01%, reflecting limited returns on shareholder investment. The equity ratio is also low, suggesting a heavy reliance on debt financing. These factors highlight potential financial instability and risk.

Cash Flow

Cash flow analysis shows a positive trend with a 4.41% growth in free cash flow in the TTM period. The operating cash flow to net income ratio is 0.86, indicating good cash generation relative to net income. The free cash flow to net income ratio of 0.72 suggests that the company is generating sufficient free cash flow to cover its net income. Despite the positive cash flow metrics, the overall financial health is impacted by high leverage.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.23B	2.25B	2.18B	2.10B	1.90B	1.73B
Gross Profit	664.86M	790.01M	776.47M	720.76M	536.66M	621.48M
EBITDA	519.71M	554.23M	552.05M	501.63M	475.30M	403.31M
Net Income	192.06M	194.36M	204.44M	177.37M	200.39M	117.83M
Balance Sheet
Total Assets	4.89B	5.03B	5.18B	5.50B	5.10B	5.04B
Cash, Cash Equivalents and Short-Term Investments	281.23M	450.51M	516.04M	745.89M	249.44M	306.99M
Total Debt	4.09B	4.09B	4.14B	4.28B	3.86B	3.68B
Total Liabilities	4.78B	4.78B	4.87B	5.03B	4.66B	4.49B
Stockholders Equity	112.89M	259.35M	309.78M	465.72M	436.40M	549.60M
Cash Flow
Free Cash Flow	256.88M	260.92M	260.39M	174.36M	267.79M	215.39M
Operating Cash Flow	355.85M	355.31M	345.42M	259.90M	345.77M	284.36M
Investing Cash Flow	-137.61M	-129.31M	-86.55M	-77.78M	-154.67M	-68.25M
Financing Cash Flow	-413.40M	-303.10M	-504.30M	288.67M	-242.74M	-157.91M

Wendy's Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 10.33
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WEN, the sentiment is Neutral. The current price of 10.33 is above the 20-day moving average (MA) of 10.27, below the 50-day MA of 10.49, and below the 200-day MA of 13.08, indicating a neutral trend. The MACD of -0.04 indicates Negative momentum. The RSI at 50.36 is Neutral, neither overbought nor oversold. The STOCH value of 30.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WEN.

Wendy's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DRI	79 Outperform	$24.60B	23.49	46.16%	2.71%	6.03%	4.08%
DPZ	73 Outperform	$15.71B	27.09	-14.74%	1.40%	3.65%	5.71%
MCD	70 Outperform	$226.21B	27.10	-216.57%	2.25%	1.17%	2.09%
WING	69 Neutral	$8.62B	53.95	-16.09%	0.36%	22.74%	87.07%
YUM	64 Neutral	$39.87B	28.38	-19.43%	1.94%	11.30%	-7.82%
WEN	63 Neutral	$1.94B	10.61	99.35%	7.55%	1.31%	-1.46%
Sector *	61 Neutral	$17.97B	12.87	-5.30%	2.97%	1.26%	-14.45%

Wendy's Corporate Events

Wendy’s Approves Stock-Based Retention Awards for Executives

On July 24, 2025, Wendy’s Board of Directors approved stock-based retention awards for its executive leadership team, excluding Interim CEO Ken Cook, to ensure smooth leadership transition and continuity. These awards, effective August 12, 2025, include restricted stock units and stock options for key executives like E.J. Wunsch and Lindsay J. Radkoski, vesting over two years, contingent on continued employment.

Wendy’s Appoints Pete Suerken as U.S. President

On July 22, 2025, Wendy’s announced the appointment of Pete Suerken as President, U.S., succeeding Abigail Pringle, who will depart the company after a transition period. Suerken, who has a strong background in supply chain management and innovation, is expected to drive profitability and growth for Wendy’s U.S. operations. This leadership change aims to enhance Wendy’s operational excellence and strategic priorities, benefiting franchisees, employees, and shareholders.

Wendy’s CEO Resignation and Interim Leadership Change

On July 1, 2025, Kirk Tanner announced his resignation as President and CEO of Wendy’s to join The Hershey Company, effective July 18, 2025. Ken Cook, the current CFO, will serve as Interim CEO while continuing his CFO role. The Board has initiated a search for a permanent CEO. Additionally, Bradley G. Peltz was elected to the Board, replacing Matthew H. Peltz, who resigned to focus on other commitments. These leadership changes are part of Wendy’s strategic plan to continue its growth and enhance its market position.