The Wendy’s Company (NASDAQ:WEN) reported its latest quarterly results last week, which surpassed analyst expectations. For the period ending July 4, the company’s adjusted earnings per share of $0.27 came in well ahead of the $0.18 per-share profit that Wall Street was looking for. And its revenue of $493.3 million was also better than analyst projections of $462.6 million.
Not only was it a strong period for the company, but Wendy’s also raised its guidance, now projecting sales growth between 11% and 13% this year, up from a previous forecast of 8% to 10%. Longer term, the company is going to open 700 ghost kitchens within the next four years across multiple countries which will help it minimize costs and benefit from greater efficiencies.
Wendy’s also announced a 20% dividend increase on the strong results, now paying investors $0.12 per share. With the boost, the stock is yielding just over 2% annually – well above the S&P 500 average of around 1.3%.
Over the past year, shares of Wendy’s have increased just 6%. And although the stock could make for a good buy as the economy recovers from the pandemic, rising COVID-19 cases due to the delta variant could jeopardize that, especially if restrictions are put back into place.
And despite the good results, Wendy’s stock is still on the expensive side, trading at a forward price-to-earnings multiple of 29; by comparison,
Restaurant Brands International (TSX:QSR)(NYSE:QSR), which owns Burger King and Tim Hortons, trades at just 23 times its future profits. However, Wendy’s still looks like a good long-term buy as it potentially shifts to a leaner business model in the future which should bolster its profits.