Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Wendy's (NASDAQ: WEN) climbed 10% today after the fast-food restaurant operator posted strong quarterly results and announced a plan to sell about 425 restaurants by mid-2014.
So what: The stock has soared over the past year on optimism over its rebranding initiatives, and today's second-quarter results -- EPS of $0.03 on a 260-basis-point operating margin increase -- only reinforce those good vibes. Additionally, management's decision to sell 425 company-owned restaurants to franchisees should give Wendy's a much more stable revenue stream from a higher percentage of royalty and rent income.
Now what: In connection with the sales plan, Wendy's approved a 25% bump in its quarterly dividend and also authorized a share repurchase program for up to $100 million. "The dividend increase and share repurchases are important elements of our financial management strategy," CFO Steve Hare said. "We are committed to continuing to deploy capital to drive the organic growth of our restaurant business, in addition to returning cash to shareholders." With the stock now up a whopping 80% over the past year and trading at a forward P/E of 30, however, much of that growth might already be baked into the valuation.
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.