Wendy's (WEN) Valuation Check After JPMorgan Downgrade and 2025 Store Closure Plan

Wendy's (WEN) is back in the spotlight after JPMorgan cut its rating to Neutral, as the chain prepares to close roughly 300 underperforming U.S. restaurants in 2025 in an effort to streamline profitability.

See our latest analysis for Wendy's.

The JPMorgan downgrade appears to be reinforcing an already weak trend. The 30 day share price return of minus 7.05 percent and year to date share price return of minus 47.64 percent underscore fading momentum after years of disappointing total shareholder returns.

If this shake up in quick service chains has you rethinking where growth might come from next, it could be worth exploring fast growing stocks with high insider ownership for other ideas with stronger momentum and insider conviction.

With the stock down nearly 50 percent over the past year and trading at a double-digit discount to analyst targets, investors now face a key question: is this a contrarian entry point, or is the market rightly discounting future growth?

Most Popular Narrative: 17.7% Undervalued

With Wendy's last closing at $8.44 against a narrative fair value of $10.25, the story hinges on modest growth and disciplined capital allocation.

The newly announced Project Fresh strategy, which tilts priorities toward higher average unit volumes instead of aggressive store growth, is viewed as a more disciplined allocation of capital that could enhance unit economics over time.

Where ratings remain positive, proponents argue that much of the near term pressure is already reflected in lower valuation multiples, leaving room for comp acceleration or cost efficiencies to drive upside to current targets.

Read the complete narrative.

Curious how slight tweaks to revenue growth, margin uplift, and future earnings multiples can still support upside from here? The narrative leans on surprisingly patient, conservative assumptions hiding behind that fair value label.

Result: Fair Value of $10.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering pressure on U.S. franchisees and rising commodity and wage costs could quickly erode the modest margin and earnings gains that this narrative assumes.

Find out about the key risks to this Wendy's narrative.

Build Your Own Wendy's Narrative

If you are not fully convinced by this outlook or want to dig into the numbers yourself, you can build a custom view in minutes: Do it your way.

A great starting point for your Wendy's research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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