Will Wendy's (WEN) Stock Be Affected By Its Russian Retreat?

NEW YORK (TheStreet) -- Shares of Wendy's Co. (WEN) are down -0.24% to $8.25 after it was reported that the company is leaving the Russian market after three years, following a change in the local franchisee's management, Bloomberg reports.

The country's eight Wendy's outlets are being shut down, a spokesman for Wendy's said by e-mail in a response to Bloomberg questions.

Wenrus Restaurant Group, a former unit of Moscow-based Food Service Capital, had agreed in 2010 to open 180 restaurants under the format across Russia within a decade, Bloomberg said.

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TheStreet Ratings team rates WENDY'S CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate WENDY'S CO (WEN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, compelling growth in net income, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • WENDY'S CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WENDY'S CO increased its bottom line by earning $0.12 versus $0.02 in the prior year. This year, the market expects an improvement in earnings ($0.35 versus $0.12).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 2070.8% when compared to the same quarter one year prior, rising from $2.13 million to $46.30 million.
  • WEN, with its decline in revenue, slightly underperformed the industry average of 6.5%. Since the same quarter one year prior, revenues fell by 13.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: WEN Ratings Report

 

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