Wendy's Profit Falls Short

Wendy's(WEN Quote - Cramer on WEN - Stock Picks) fourth-quarter profit rose sharply, helped by improved margins and the absence of charges that hit the year-earlier period.

Still, the earnings were slightly below analysts' targets for the quarter, sending shares of Wendy's down 3% early Monday.

The company posted net income of $14.1 million, or 16 cents a share, for the fourth quarter. That was up from $3 million, or 3 cents a share, a year earlier, when results were hit by a $6.9 million pretax loss from discontinued operations and $7.9 million in restructuring costs.

Adjusted earnings, which exclude the effect of charges tied to restructuring and Wendy's ongoing strategic review, rose to 21 cents a share from 14 cents a year earlier. Analysts, on average, anticipated earnings of 23 cents a share on this basis.

Sales slipped to $596.0 million from $596.4 million the prior year. Wall Street expected revenue of $592.4 million.

Same-store sales, or sales at stores open at least a year, fell 0.8% at company-operated restaurants. At U.S. franchise restaurants, same-store sales rose 0.2%.

Margins for earnings before interest, taxes, depreciation and amortization rose to 10.1% from 8.9% a year earlier at Wendy's U.S. company-operated restaurants. The company said it benefitted from menu price increases, favorable shifts in product mix and labor efficiencies.

The results cap a tumultuous year for Wendy's, which has been hurt by rising commodity prices and an attempted sales turnaround that has yet to gain traction. The company has been exploring a possible sale amid these troubles.

Wendy's said last week that it believes it is in the final stages of the review process. The company noted that the review has taken longer than anticipated, attributing the trouble to turmoil in the financial markets.

Shares of Wendy's recently were down 81 cents to $24.37.