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Why Wendy's Stock Popped Today

By Jeremy Bowman – Aug 7, 2019 at 1:27PM

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Investors are happy with solid profit growth from the fast-food chain in the second quarter.

What happened

Shares of Wendy's (WEN -2.17%) were heating up today after the burger slinger posted better-than-expected earnings results in its second-quarter report. Shares were up 6.1% as of 12:06 p.m. EDT.

So what

Wendy's turned in another solid performance for the quarter: Comparable sales rose 1.4% in North America, and systemwide sales ticked up 3.3%. Overall revenue rose 5.9% to $435.3 million, though that was short of estimates at $439.9 million. On the bottom line, investors were impressed with adjusted earnings per share rising from $0.14 to $0.18, which topped expectations by a penny, as profit growth was supported by cost controls in advertising and general and administrative expenses.

The entrance to a remodeled Wendy's.

Image source: Wendy's.

CEO Todd Penegor summed up the quarter, saying: "We delivered another quarter of strong earnings growth and are pleased with our continued progress to build an even stronger foundation for the Wendy's brand. We are executing on our plan to accelerate same-restaurant sales in North America and drive global restaurant expansion, fueled by a healthy restaurant economic model."

Now what

Wendy's maintained its guidance for the year, continuing to call for systemwide sales growth of 3% to 4% and adjusted EPS growth of 3.5% to 7%. Like other fast-food chains, Wendy's has benefited from the boom in app-based food delivery, which has opened up a new market for the previously struggling restaurant industry. Wendy's shares are up 23% so far this year, and after today's gains, the stock looks poised to continue enjoying those tailwinds.

Jeremy Bowman has no position in any of the 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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