- Cowen analyst Andrew M. Charles reiterated a Market Perform rating on the shares of Wendy's Co WEN and raised the price target from $19 to $22.
- Wendy's preannounced strong Q4 results in conjunction with an announcement that Trian has concluded the exploration & evaluation of a potential transaction to enhance shareholder value, the analyst said.
- Ironically, the search began when shares were trading at $16.27 that have since appreciated to $22-$23, the analyst noted.
- The analyst said, as a consolation prize, the company announced a new $500 million stock buyback authorization that replaces the prior authorization and expires in Feb 2027, representing 10% of the company's market cap.
- Related: Wendy's Clocks 13.4% Preliminary Top-Line Growth In Q4; Doubles Dividend; Redesigns Organization
- The analyst pointed out that the dividend has been increased 100% to $0.25/share, representing a 4.5% dividend yield, the highest in the restaurant industry.
- A reorganization that will lead to relatively flat 2022 G&A (general and administrative expenses) of $255 million in 2023-24, versus Consensus Metrix (CM) $260 million & $269 million, the analyst said.
- Management was mum on details though the analyst expected the reorganization to include a reduced headcount.
- The analyst has raised 2023-24E adj EBITDA to $533 million & $560 million, from $508 million & $539 million on higher U.S. same-store sales.
- Wedbush analyst Nick Setyan reiterated an Outperform rating on the shares with a price target of $26.50.
- Global system SSS growth of 6.4% was above 4.6% consensus, including U.S. SSS growth of 5.9% versus 4.3% cons. and International SSS growth of 9.9% versus 7.8% cons, the analyst said.
- With the exception of Peltz, apparently, in the analyst's view, most other shareholders would have preferred a much shorter timeframe for the buyback instead of a doubling of the dividend to >4.5%.
- Price Action: WEN shares are trading higher by 6.22% at $23.13 on the last check Friday.
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