NEW YORK ( TheStreet) -- Wendy's (NYSE: WEN) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins. Highlights from the ratings report include:
- This stock has managed to rise its share value by 10.44% over the past twelve months.
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- WENDY'S CO has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, WENDY'S CO reported lower earnings of $0.00 versus $0.01 in the prior year. This year, the market expects an increase in earnings to $0.15 from $0.00.
- Net operating cash flow has decreased to $49.50 million or 24.03% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 336.3% when compared to the same quarter one year ago, falling from -$0.91 million to -$3.97 million.