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:
We started the process of determining a valid price forecast for Wendy's Co with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Wendy's Co ranked in the 65th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 120.83%. As for the metrics that stood out in our discounted cash flow analysis of Wendy's Co, consider:
Its compound free cash flow growth rate, as measured over the past 5.75 years, is 0.55% -- higher than 84.29% of stocks in our DCF forecasting set.
The business' balance sheet suggests that 44% of the company's capital is sourced from debt; this is greater than 65.37% of the free cash flow producing stocks we're observing.
The company's cost of debt, derived from its interest coverage, tax rate, and market capitalization, is greater than 59.15% of stocks in its sector (Consumer Cyclical).
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
MBUU, DIN, LCII, CBRL, and ALSN can be thought of as valuation peers to WEN, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.
Wendy’s, McDonald’s and other quick-service restaurants are weathering the coronavirus pandemic better than many chains because they already conduct a large amount of sales for takeaway or drive thru, according to J.P. Morgan analyst John Ivankoe. They might have already appreciated too much for new investors now, however.