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Wendy's (WEN) to Announce Q2 Earnings: What's in Store?

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The Wendy's Company (WEN - Free Report) is scheduled to report second-quarter fiscal 2023 results on Aug 9, 2023, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 5%.

How are Estimates Placed?

The Zacks Consensus Estimate for fiscal second-quarter earnings per share is pegged at 28 cents, indicating growth of 16.7% from 24 cents registered in the year-ago quarter.

For revenues, the consensus mark is pegged at $569.1 million, suggesting growth of 5.8% from the prior-year quarter’s figure.

The Wendy's Company Price and EPS Surprise

 

The Wendy's Company Price and EPS Surprise

The Wendy's Company price-eps-surprise | The Wendy's Company Quote

 

Let's look at how things have shaped up in the quarter.

Factors at Play

Wendy’s fiscal second-quarter top line is expected to increase year over year, courtesy of acceleration in global digital business, development programs and marketing initiatives. The introduction of new menu items, focus on breakfast daypart offerings and the ramp-up of targeted trial-driving promotions are likely to have contributed to the growth.

Substantial contributions from franchise royalty and advertising funds revenues might have aided the company’s fiscal second-quarter top line. For the to-be-reported quarter, our model predicts franchise royalty revenues to increase 11% year over year to $138.7 million. We expect advertising funds revenues to increase 7% year over year to $112.3 million.

The emphasis on third-party delivery partners and increased delivery and mobile order sales have been a catalyst for Wendy’s. The momentum is expected to have driven top-line growth.

Continued strategic pricing actions and growth in customer counts are likely to have driven comps improvement in the second quarter. Per our model, systemwide same-restaurant sales are expected to rise 2.7% year over year.

Wendy’s fiscal second quarter bottom line is likely to have been affected by commodity and wage inflation and a challenging macro environment. For the second-quarter fiscal 2023, our model predicts total costs and expenses to increase 5.4% year over year to $465.2 million. We expect general and administrative expenses to increase 9.5% year over year to $67.5 million.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Wendy’s this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. But that's not the case here.

Earnings ESP: Wendy’s has an Earnings ESP of -2.30%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #4 (Sell).

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these also have the right combination of elements to post an earnings beat:

Arhaus (ARHS - Free Report) currently has an Earnings ESP of +7.69% and sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

ARHS’s earnings for the to-be-reported quarter are expected to decline 7.1% year over year. The company reported better-than-expected earnings in all the trailing four quarters, the average surprise being 82.4%.

Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +0.60% and a Zacks Rank #2.

JACK’s earnings for the to-be-reported quarter are expected to decline 3.6% year over year. The company reported better-than-expected earnings in two of the trailing four quarters and missed the mark twice, the average surprise being 7.9%.

Costco Wholesale Corporation (COST - Free Report) currently has an Earnings ESP of +1.08% and a Zacks Rank of #3.

COST’s earnings for the to-be-reported quarter are expected to increase 12.4% year over year. The company reported better-than-expected earnings in three of the trailing four quarters and missed the mark once, the average surprise being 1.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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