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Wendy's (WEN) Q3 Earnings Beat Estimates, Revenues Miss
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The Wendy's Company (WEN - Free Report) reported mixed third-quarter fiscal 2022 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. The top and bottom lines rose year over year. Following the quarterly results, the company’s shares increased 3% on Nov 9.
Q3 Earnings & Revenues
For the fiscal third quarter, the company reported adjusted earnings of 24 cents per share. The bottom line beat the Zacks Consensus Estimate of 23 cents and increased 26.3% year over year from adjusted earnings per share (EPS) of 19 cents reported in the prior-year quarter.
Quarterly revenues of $532.6 million fell short of the consensus mark of $542 million. However, the top line increased 13.3% on a year-over-year basis. The upside was primarily driven by higher sales at company-operated restaurants (which benefited from the acquisition of 93 franchise-operated restaurants in Florida in fourth-quarter 2021) and higher same-restaurant sales. Also, a rise in franchise royalty revenues and advertising funds revenues added to the upside.
During the quarter under review, same-restaurant sales at international restaurants (excluding Venezuela and Argentina) rose 10.8% year over year compared with growth of 14.7% in the year-ago quarter. Comps at Global restaurants rose 6.9% year over year compared with a 3.3% increase reported in the prior-year quarter. Comps in the United States witnessed an improvement of 6.4% year over year compared with an increase of 2.1% in the prior-year quarter.
In the quarter under review, Wendy’s inaugurated 58 restaurants globally, reflecting an increase of 40 net new units.
The Wendy's Company Price, Consensus and EPS Surprise
During the fiscal third quarter, global system-wide sales — including company-operated and franchise restaurants — were nearly $3.4 million, up 8.4% year over year. During the quarter under review, system-wide sales in the U.S. and the International segments were approximately $3 million and $0.4 million, up 7.7% and 14.1% year over year, respectively.
Operating Highlights
During the fiscal third quarter, the company-operated restaurant margin came in at 14.3% compared with 14.4% in the year-ago quarter. The downside was primarily due to higher commodity and labor costs, a decline in customer counts and increased investments (to support the entry into the United Kingdom market). However, this was partially offset by a higher average check.
General and administrative expenses in the quarter were $62.5 million compared with $62.8 million reported in the prior-year quarter. This was primarily on account of a lower incentive compensation accrual.
Quarterly operating profit amounted to $98.1 million, up 22.4% from the year-ago quarter. The increase was primarily driven by gains from insurance recoveries and higher franchise royalty revenues.
Net income during the fiscal third quarter was $50.5 million, up 22.8% from $41.2 million reported in the year-ago quarter.
Adjusted EBITDA during the quarter totaled $134.5 million, up 19.9% from $112.2 million reported in the prior-year quarter. The upside was primarily driven by an increase in operating income.
Balance Sheet
Cash and cash equivalents as of Oct 2, 2022, totaled $731.8 million compared with $249.4 million on Jan 2, 2022. Inventories at the end of the fiscal third quarter amounted to $6.6 million compared with $5.9 million reported in the previous quarter. As of Oct 2, 2022, long-term debt was $2,827.5 million compared with $2,356.4 million at the end of Jan 2, 2022.
The company declared a quarterly dividend of 12.5 cents per share. The dividend will be paid out on Dec 15, 2022, to shareholders on record as of Dec 1, 2022.
2022 Outlook
For 2022, the company now expects global system-wide sales growth to be 6-7% compared with the prior estimate of 6-8%. Adjusted EBITDA is projected in the band of $490-$500 million, down from the earlier estimate of $490-$505 million. Adjusted EPS for 2022 is anticipated to be in the range of 84-88 cents.
The Zacks Consensus Estimate for 2022 earnings is pegged at 84 cents. The company anticipates cash flow from operations to be in the band of $305-$320 million, while capital expenditures are projected between $90 million and $95 million. Free cash flow is anticipated to be $215-$225 million.
Wingstop currently sports a Zacks Rank #1. WING has a long-term earnings growth rate of 11%. Shares of WING have declined 9.2% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the comparable year-ago period’s levels.
Chipotle currently carries a Zacks Rank #2 (Buy). CMG has a trailing four-quarter earnings surprise of 4.1% on average. The stock has declined 24.2% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.7% and 29.8%, respectively, from the corresponding year-ago period’s levels.
Cracker Barrel currently carries a Zacks Rank #2. CBRL has a trailing four-quarter earnings surprise of 4.8% on average. Shares of CBRL have decreased 24.5% in the past year.
The Zacks Consensus Estimate for Cracker Barrel’s 2023 sales and EPS suggests growth of 6.4% and 7.1%, respectively, from the comparable year-ago period’s levels.
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Wendy's (WEN) Q3 Earnings Beat Estimates, Revenues Miss
The Wendy's Company (WEN - Free Report) reported mixed third-quarter fiscal 2022 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. The top and bottom lines rose year over year. Following the quarterly results, the company’s shares increased 3% on Nov 9.
Q3 Earnings & Revenues
For the fiscal third quarter, the company reported adjusted earnings of 24 cents per share. The bottom line beat the Zacks Consensus Estimate of 23 cents and increased 26.3% year over year from adjusted earnings per share (EPS) of 19 cents reported in the prior-year quarter.
Quarterly revenues of $532.6 million fell short of the consensus mark of $542 million. However, the top line increased 13.3% on a year-over-year basis. The upside was primarily driven by higher sales at company-operated restaurants (which benefited from the acquisition of 93 franchise-operated restaurants in Florida in fourth-quarter 2021) and higher same-restaurant sales. Also, a rise in franchise royalty revenues and advertising funds revenues added to the upside.
During the quarter under review, same-restaurant sales at international restaurants (excluding Venezuela and Argentina) rose 10.8% year over year compared with growth of 14.7% in the year-ago quarter. Comps at Global restaurants rose 6.9% year over year compared with a 3.3% increase reported in the prior-year quarter. Comps in the United States witnessed an improvement of 6.4% year over year compared with an increase of 2.1% in the prior-year quarter.
In the quarter under review, Wendy’s inaugurated 58 restaurants globally, reflecting an increase of 40 net new units.
The Wendy's Company Price, Consensus and EPS Surprise
The Wendy's Company price-consensus-eps-surprise-chart | The Wendy's Company Quote
System-Wide Sales Discussion
During the fiscal third quarter, global system-wide sales — including company-operated and franchise restaurants — were nearly $3.4 million, up 8.4% year over year. During the quarter under review, system-wide sales in the U.S. and the International segments were approximately $3 million and $0.4 million, up 7.7% and 14.1% year over year, respectively.
Operating Highlights
During the fiscal third quarter, the company-operated restaurant margin came in at 14.3% compared with 14.4% in the year-ago quarter. The downside was primarily due to higher commodity and labor costs, a decline in customer counts and increased investments (to support the entry into the United Kingdom market). However, this was partially offset by a higher average check.
General and administrative expenses in the quarter were $62.5 million compared with $62.8 million reported in the prior-year quarter. This was primarily on account of a lower incentive compensation accrual.
Quarterly operating profit amounted to $98.1 million, up 22.4% from the year-ago quarter. The increase was primarily driven by gains from insurance recoveries and higher franchise royalty revenues.
Net income during the fiscal third quarter was $50.5 million, up 22.8% from $41.2 million reported in the year-ago quarter.
Adjusted EBITDA during the quarter totaled $134.5 million, up 19.9% from $112.2 million reported in the prior-year quarter. The upside was primarily driven by an increase in operating income.
Balance Sheet
Cash and cash equivalents as of Oct 2, 2022, totaled $731.8 million compared with $249.4 million on Jan 2, 2022. Inventories at the end of the fiscal third quarter amounted to $6.6 million compared with $5.9 million reported in the previous quarter. As of Oct 2, 2022, long-term debt was $2,827.5 million compared with $2,356.4 million at the end of Jan 2, 2022.
The company declared a quarterly dividend of 12.5 cents per share. The dividend will be paid out on Dec 15, 2022, to shareholders on record as of Dec 1, 2022.
2022 Outlook
For 2022, the company now expects global system-wide sales growth to be 6-7% compared with the prior estimate of 6-8%. Adjusted EBITDA is projected in the band of $490-$500 million, down from the earlier estimate of $490-$505 million. Adjusted EPS for 2022 is anticipated to be in the range of 84-88 cents.
The Zacks Consensus Estimate for 2022 earnings is pegged at 84 cents. The company anticipates cash flow from operations to be in the band of $305-$320 million, while capital expenditures are projected between $90 million and $95 million. Free cash flow is anticipated to be $215-$225 million.
Zacks Rank & Key Picks
Wendy's currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Retail – Restaurants industry are Wingstop Inc. (WING - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) and Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) .
Wingstop currently sports a Zacks Rank #1. WING has a long-term earnings growth rate of 11%. Shares of WING have declined 9.2% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the comparable year-ago period’s levels.
Chipotle currently carries a Zacks Rank #2 (Buy). CMG has a trailing four-quarter earnings surprise of 4.1% on average. The stock has declined 24.2% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.7% and 29.8%, respectively, from the corresponding year-ago period’s levels.
Cracker Barrel currently carries a Zacks Rank #2. CBRL has a trailing four-quarter earnings surprise of 4.8% on average. Shares of CBRL have decreased 24.5% in the past year.
The Zacks Consensus Estimate for Cracker Barrel’s 2023 sales and EPS suggests growth of 6.4% and 7.1%, respectively, from the comparable year-ago period’s levels.