While it's true that Wendy's earned $12.4 million, or 3 cents per share, a year ago, last year's earnings were also boosted by $18 million gain on an investment sale. Plus, Wendy's earnings dropped this quarter to 1 cent per share but the results also included significant costs related to remodeling. When adjusting out these costs, earnings were 3 cents per share, in line with Street estimates.
Revenue were up 2% year over year to $604 million, missing estimates by less than 2%. That's not much of a surprise, however. But it was still enough to outperform McDonald's, which posted revenue 1% revenue growth. For Wendy's, I was also pleased with the 1% growth in same-store sales for North America, which was on par with Chipotle's performance and slightly better than McDonald's.
I'm not going to say that Wendy's is stealing share from McDonald's and/or Chipotle, but the fact that gross margin advanced 50 basis points year over year to 23.7% is also an encouraging sign the company is outperforming its own expectations. The fact that Wendy's raised its prices, which helped offset the decline in its transactions, demonstrates good execution.
In other words, although Wendy's is seeing less foot traffic, the customers it gets are paying more -- a sign the company is building leverage. If management can continue to capitalize on this performance, the stock should perform accordingly. In that regard, for the next quarter, the Street is looking for 6 cents in earnings per share on revenue of $664.4 million.