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Wendy's (WEN) Surges 25.9%: Is This an Indication of Further Gains?

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Wendy's (WEN) shares ended the last trading session 25.9% higher at $28.87. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 0.9% gain over the past four weeks.

Shares of The Wendy's surged on Jun 8, driven by bullish comments about the company by Reddit investing communities. Wendy’s is now the first fast-food “meme stock.”

This hamburger chain is expected to post quarterly earnings of $0.18 per share in its upcoming report, which represents a year-over-year change of +50%. Revenues are expected to be $459.36 million, up 14.2% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Wendy's, the consensus EPS estimate for the quarter has been revised 2.1% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on WEN going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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