Earnings Preview: Wendy's to report 4Q

Wendy's 4th-quarter results to give glimpse of burger chain's transformation efforts

Associated Press

NEW YORK (AP) -- Wendy's reports its audited fiscal fourth-quarter results Thursday, which should provide more details on the preliminary results the hamburger chain released in January and a possible update on its outlook for the year.

WHAT TO WATCH FOR: Last month, the Dublin, Ohio-based company said preliminary results for the three months ended in December showed that revenue at established restaurants slipped 0.2 percent, after a strong performance in the year-ago period that got a boost from the introduction of Dave's Hot 'n Juicy cheeseburgers. The measure is a key indicator of a financial health because it strips out the impact of newly opened and closed locations.

For its fiscal 2013, Wendy's has said it expects adjusted earnings of 18 cents to 20 cents per share, with revenue to rise between 2 percent and 3 percent at company-run North American restaurants open at least 15 months and remodeled restaurants open at least three months. Analysts will be looking to see if Wendy's updates the forecast based on any trends it's seeing from its ongoing turnaround push.

WHY IT MATTERS: The fast-food company's push to reinvent itself comes at a time when people are increasingly eating at fast-casual chains such as Chipotle Mexican Grill Inc. and Panera Bread Co., which offer food that's perceived to be higher quality for slightly higher prices.

To reflect those changing habits, a critical part of the Wendy's transformation has been the remodeling of its restaurants to have a more inviting, casual feel with comfortable seating. The company's push to step up is image is intended in part to give it the ability to charge higher prices and insulate it more from economic cycles.

At the same time, Wendy's has said that value menus have always been a critical part of the fast-food industry and recently revamped its 99-cent menu to expand its offerings. The new menu has a tiered structure, with prices going up to $2.

WHAT'S EXPECTED: As reported, Wendy's earned $22.4 million, or 6 cents per share, on revenue of $629.9 million. For 2013, analysts surveyed by FactSet expect a profit of 18 cents per share, which is on the low end of the company's guidance.

LAST YEAR'S QUARTER: The company turned a profit of $4 million, or 1 cent per share, on revenue of $615 million.

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