The Wendy's Company Just Missed EPS By 6.4%: Here's What Analysts Think Will Happen Next

The first-quarter results for The Wendy's Company (NASDAQ:WEN) were released last week, making it a good time to revisit its performance. It looks like the results were a bit of a negative overall. While revenues of US$523m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.4% to hit US$0.19 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

We've discovered 2 warning signs about Wendy's. View them for free.

Taking into account the latest results, Wendy's' 21 analysts currently expect revenues in 2025 to be US$2.22b, approximately in line with the last 12 months. Statutory earnings per share are expected to shrink 2.0% to US$0.96 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.25b and earnings per share (EPS) of US$0.99 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

See our latest analysis for Wendy's

It might be a surprise to learn that the consensus price target fell 6.8% to US$14.97, with the analysts clearly linking lower forecast earnings to the performance of the stock price. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Wendy's, with the most bullish analyst valuing it at US$26.00 and the most bearish at US$13.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 1.2% annualised decline to the end of 2025. That is a notable change from historical growth of 6.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.9% annually for the foreseeable future. It's pretty clear that Wendy's' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Wendy's' revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Wendy's' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Wendy's. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Wendy's analysts - going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Wendy's (1 is a bit unpleasant) you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.