KeyBanc Capital Markets analysts visited Wendys co (NASDAQ: WEN) head office in Ohio and left with eight key takeaways.
KeyBanc's Eric Gonzalez maintains a Sector Weight rating on Wendys.
KeyBanc met with a handful of Wendys' senior executives, including CEO Todd Penegor, CFO Gunther Plosch and Chief Commercial Officer Kurt Kane. Some of the more notable takeaways from the tour and chat include:
- Franchisee profitability likely fell in 2018 (final numbers not yet available) after rising from 2015 to 2017, but restaurant margins improved in the first quarter.
- Wendys wants to be a global restaurant company but management does "not see itself that way in its current form."
- Wendys is seeing early signs of benefits of scale, which will only "get larger" moving forward from better understanding consumer data.
- Traffic trends are likely to remain flat to slightly negative in the near term, but progress was made during the first quarter.
- Management's exclusive delivery partnership with DoorDash is a strategic initiative meant to drive incremental traffic at off-peak hours.
- The company "expressed interest" in serving plant-based meat alternative products and continues to conduct R&D to "determine the sustainability of the trend."
- Management has long-term contracts in place to hedge chicken and potato costs, but it can only lock in beef prices three months in advance.
Shares of Wendys traded around $19.32 at time of publication Monday.
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Latest Ratings for WEN
|Jun 2019||Initiates Coverage On||In-Line|
|May 2019||Initiates Coverage On||Overweight|
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