Comparing Wendy’s (WEN) and Its Rivals

Wendy’s (NASDAQ:WEN) is one of 382 public companies in the “Hotels, Restaurants & Leisure” industry, but how does it contrast to its rivals? We will compare Wendy’s to similar companies based on the strength of its institutional ownership, profitability, analyst recommendations, valuation, earnings, dividends and risk.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Wendy’s and its rivals, 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, suggesting a potential downside of 8.94%. As a group, “Hotels, Restaurants & Leisure” companies have a potential upside of 58.46%. Given Wendy’s’ rivals stronger consensus rating and higher possible upside, analysts clearly believe Wendy’s has less favorable growth aspects than its rivals.

Profitability

This table compares Wendy’s and its rivals’ 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%

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.

Insider & Institutional Ownership

86.0% of Wendy’s shares are owned by institutional investors. Comparatively, 48.7% of shares of all “Hotels, Restaurants & Leisure” companies are owned by institutional investors. 17.1% of Wendy’s shares are owned by company insiders. Comparatively, 22.1% of shares of all “Hotels, Restaurants & Leisure” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

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’ rivals have a beta of 1.44, suggesting that their average stock price is 44% more volatile than the S&P 500.

Earnings & Valuation

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

Summary

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

About Wendy’s

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.