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Why Wendy's Co. Stock Popped Today

By Jeremy Bowman – May 10, 2017 at 12:35PM

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The fast-food chain gained after a solid first-quarter earnings report.

What happened

Shares of Wendy's Co. (WEN 1.35%) were rising today after the fast-food chain posted better-than-expected first-quarter earnings results this morning. The stock was up 5% as of 11:12 a.m. EDT.

So what 

The nation's No. 3 burger chain delivered solid growth as its value meals proved popular. During a time when many restaurants have struggled, same-store sales at Wendy's increased 1.6% in North America. Overall revenue was down 24.5% to $285.8 million due to aggressive refranchising, but that topped expectations of $281.9 million. 

A Wendy's cheeseburger

Image source: Wendy's.

Adjusted earnings per share fell from $0.11 a year ago to $0.09 due in part to higher labor expenses, but that still beat estimates by a penny. CEO Todd Penegor said, "We are pleased with our solid first quarter results as we were able to deliver high quality earnings despite tough prior year comparisons."

Now what

Looking ahead, Wendy's said it still expects full-year earnings per share of $0.45-$0.47, representing 13%-18% growth from 2016. It also projects 2%-3% same-store sales growth in North America.

The jump in the stock today seems more of a reflection of low expectations because of the "restaurant recession" rather than blockbuster results, but the company also said it remains on track to reach its 2020 global restaurant count of 7,500 and systemwide sales of $12 billion. Wendy's should be able to keep delivering steady growth toward those goals.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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