Wendy's owns and franchises hamburger-focused Wendys restaurants. The company was founded in 1969 and is based in Dublin, Ohio.
WEN Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Wendy's Co. To summarize, we found that Wendy's Co ranked in the 62th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 113% on a DCF basis. In terms of the factors that were most noteworthy in this DCF analysis for WEN, they are:
The company's debt burden, as measured by earnings divided by interest payments, is 2.21; that's higher than 50.8% of US stocks in the Consumer Cyclical sector that have positive free cash flow.
The company's compound free cash flow growth rate over the past 4.24 years comes in at 0.72%; that's greater than 86.69% of US stocks we're applying DCF forecasting to.
The business' balance sheet reveals debt to be 43% of the company's capital (with equity being the remaining amount). Approximately 65.26% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
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Cowen is out with a very positive read on Wendy's ([[WEN]] +0.2%) after meeting with management.Analyst Andrew Charles: "Looking ahead, the company believes there is the opportunity to grow awareness of breakfast as the offering only has 50% broad awareness as well as a large, but unquantified, group of existing customers...
Investment Conclusion. There were a lot of positives in The Wendy’s Company’s (WEN) F2Q2020 results. Fueled by drive-through transactions, domestic same-stores sales turned positive in June and July and grew sequentially from June to July. In addition, the breakfast segment continued to deliver strong retail sales growth despite the impact...
Poonam A. Arora on Seeking Alpha | August 10, 2020