Head-To-Head Review: Wendy’s (WEN) and The Competition

Wendy’s (NASDAQ:WEN) is one of 382 publicly-traded companies in the “Hotels, Restaurants & Leisure” industry, but how does it weigh in compared to its peers? We will compare Wendy’s to related businesses based on the strength of its analyst recommendations, dividends, earnings, institutional ownership, risk, valuation and profitability.

Earnings and Valuation

This table compares Wendy’s and its peers top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Wendy’s	$2.18 billion	$165.07 million	16.28
Wendy’s Competitors	$3.42 billion	$250.20 million	-160.29

Wendy’s’ peers have higher revenue and earnings than Wendy’s. Wendy’s is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Dividends

Wendy’s pays an annual dividend of $0.28 per share and has a dividend yield of 3.4%. Wendy’s pays out 54.9% of its earnings in the form of a dividend. As a group, “Hotels, Restaurants & Leisure” companies pay a dividend yield of 3.2% and pay out 38.8% of their earnings in the form of a dividend.

Institutional & Insider Ownership

86.0% of Wendy’s shares are held by institutional investors. Comparatively, 48.7% of shares of all “Hotels, Restaurants & Leisure” companies are held by institutional investors. 17.1% of Wendy’s shares are held by insiders. Comparatively, 22.1% of shares of all “Hotels, Restaurants & Leisure” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for Wendy’s and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	6	11	1	0	1.72
Wendy’s Competitors	3812	17305	25623	907	2.50

Wendy’s currently has a consensus price target of $7.56, indicating a potential downside of 8.94%. As a group, “Hotels, Restaurants & Leisure” companies have a potential upside of 58.46%. Given Wendy’s’ peers stronger consensus rating and higher probable upside, analysts clearly believe Wendy’s has less favorable growth aspects than its peers.

Risk & Volatility

Wendy’s has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, Wendy’s’ peers have a beta of 1.44, suggesting that their average stock price is 44% more volatile than the S&P 500.

Profitability

This table compares Wendy’s and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	5.72%	115.31%	2.70%
Wendy’s Competitors	2.45%	-40.43%	2.13%

Summary

Wendy’s peers beat Wendy’s on 9 of the 15 factors compared.

Wendy’s Company Profile

The Wendy’s Company operates and franchises quick-service restaurants under the Wendy’s name. Founded by Dave Thomas in Columbus, Ohio, in 1969, the chain is known for hamburgers made with fresh, never-frozen beef in the United States, along with chicken sandwiches, nuggets, fries, salads and its signature Frosty dessert. Wendy’s restaurants also offer breakfast items and a range of beverages. The company serves customers in the United States and international markets through a mix of company-operated and franchised locations.