Wendy’s (NASDAQ:WEN) is the world’s third largest hamburger chain, behind McDonald’s and Burger King. The latter is owned by the Canada-based Restaurant Brands International.
Shares of Wendy’s have climbed 30% in 2019 as of close on September 27. Investors can expect to see Wendy’s third quarter results in early November. In the second quarter the company reported total revenues of $435.3 million which were up 5.9% from the prior year. Adjusted EBITDA increased 7.6% year-over-year to $117.8 million and adjusted earnings per share rose 28.6% to $0.18.
In the year-to-date period Wendy’s has achieved 6.6% revenue growth to $843.9 million. Adjusted earnings per share have also climbed 28% in the first six months of 2019 to $0.28. Wendy’s stock encountered turbulence in September after a surprising announcement.
Wendy’s announced in September that it would launch a breakfast menu nationwide. The company has made three previous attempts at a breakfast menu that met with limited success. However, the decision by McDonald’s to launch an all-day breakfast menu was also met with skepticism several years ago. This turned out to be a massive driver for growth in the back half of the decade.
I like the bold move from Wendy’s as we head into the final months of 2019. Breakfast represents nearly a quarter of fast-food traffic and it is harmful to be absent from this space. The stock still boasts a favourable price-to-earnings ratio of 9.9 and it also offers a modest dividend yield of 2%. Its move to offer breakfast is a high-upside play that makes the stock worth a look in October.
