Taking on analysts’ expectations and winning: The Wendy’s Company (WEN)

The Wendy’s Company (NASDAQ: WEN) stock fell -2.06% on Friday to $19.52 against a previous-day closing price of $19.93. With 1.36 million shares changed hands, the volume of the stock remained lighter than its average volume of 2.42 million shares. During the session, the Restaurants company that operates in wider Consumer Cyclical sector, reached to the highest price of $20.16 whereas the lowest price it dropped to was $19.51. The 52-week range on WEN shows that it touched its highest point at $24.48 and its lowest point at $15.77 during that stretch. It currently has a 1-year price target of $23.33. With its current market cap of 4.14 billion, WEN has annualized dividend of $0.50 while the current yield stands at 2.56%. Beta for the stock currently stands at 0.91.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of WEN was down-trending over the past week, with a drop of -2.84%, but this was down by -2.06% over a month. Three-month performance surged to 9.23% while six-month performance fell -10.95%. The stock lost -10.42% in the past year, while it has lost -18.16% so far this year. A look at the trailing 12-month EPS for WEN yields 0.81 with Next year EPS estimates of 1.00. For the next quarter, that number is 0.23. This implies an EPS growth rate of 72.80% for this year and 17.81% for next year. EPS is expected to grow by 10.45% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 12.90%.

Float and Shares Shorts:

At present, 213.67 million WEN shares are outstanding with a float of 194.57 million shares on hand for trading. On Jul 14, 2022, short shares totaled 6.51 million, which was 3.04% higher than short shares on Jun 14, 2022. In addition to Mr. Todd Allan Penegor as the firm’s Pres, CEO & Director, Mr. Gunther Plosch serves as its Chief Financial Officer.

Institutional Ownership:

Through their ownership of 72.36% of WEN’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 38.36% of WEN, in contrast to 33.32% held by mutual funds. Shares owned by individuals account for 21.88%. As the largest shareholder in WEN with 11.91% of the stake, Trian Fund Management LP holds 25,333,339 shares worth 25,333,339. A second-largest stockholder of WEN, The Vanguard Group, Inc., holds 17,190,483 shares, controlling over 8.08% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in WEN, holding 13,757,749 shares or 6.47% stake. With a 2.58% stake in WEN, the MFS Mid Cap Value Fund is the largest stakeholder. A total of 5,497,600 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.37% of WEN stock, is the second-largest Mutual Fund holder. It holds 5,050,873 shares valued at 96.88 million. iShares Core S&P Mid Cap ETF holds 2.37% of the stake in WEN, owning 5,043,669 shares worth 96.74 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for WEN since 27 analysts follow the stock currently. There are 12 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 12 believe that the stock is worth HOLDING, 2 give it an OVERWEIGHT rating, and 1 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With WEN analysts setting a high price target of $27.00 and a low target of $19.00, the average target price over the next 12 months is $23.25. Based on these targets, WEN could surge 38.32% to reach the target high and fall by -2.66% to reach the target low. Reaching the average price target will result in a growth of 19.11% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. WEN will report FY 2022 earnings on 03/01/2023. Analysts have provided yearly estimates in a range of $0.89 being high and $0.81 being low. For WEN, this leads to a yearly average estimate of $0.85. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. The Wendy’s Company surprised analysts by $0.02 when it reported $0.24 EPS against a consensus estimate of $0.22. The surprise factor in the prior quarter was -$0.01. Based on analyst estimates, the high estimate for the next quarter is $0.25 and the low estimate is $0.21. The average estimate for the next quarter is thus $0.23.

Dividends & Yield:

In terms of dividends, WEN has a current ratio of $0.5, which is $0.5 over the trailing 12-months, while a dividend of $0.36 is likely to be paid on average over the next five years. Dividend yield is another indicator that appeals to many investors, and WEN currently yields $2.54. In the past year, WEN’s dividend yield has been $2.54, but when looking at the stock over the past five years, its yield has been $1.86. Accordingly, WEN has a current buyback yield of $5.7. This was $5.7 for the TTM, and it was $4.4 for the past five years.

Summary of Insider Activity:

Insiders traded WEN stock several times over the past three months with 3 Buys and 0 Sells. In these transactions, 3,315 shares were bought while 0 shares were sold. The number of buy transactions has increased to 33 while that of sell transactions has risen to 12 over the past year. The total number of shares bought during that period was 242,241 while 100,844 shares were sold.

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