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Why Wendy's Stock Dropped 7.1% on Wednesday

By Travis Hoium – Nov 10, 2021 at 6:05PM

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Third-quarter 2021 results didn't hit the spot with investors.

What happened 

Shares of restaurant stock Wendy's (WEN 0.27%) fell as much as 10.9% in trading on Wednesday after the company reported third-quarter 2021 financial results. Shares closed the day down 7.1%. 

So what

Quarterly revenue was $470.3 million, up 4% from a year ago, and net income was up 3.6% to $41.2 million. Adjusted earnings per share (EPS) were $0.19, a little better than the $0.18 that analysts expected.

Burger and to-go bag on a fast food table.

Image source: Getty Images.

Same-store sales growth of 2.1% in the U.S. and 3.3% globally was below expectations, and that's what investors were focusing on today. In general, restaurant companies have reported great numbers because they've been able to raise prices and are seeing strong volume demand, but Wendy's didn't see much of a bump at all. 

Now what

For 2021, management expects revenue to grow 11% to 12% and adjusted EPS to be $0.79 to $0.80. That means shares are trading at around 27 times 2021 earnings. 

Given the slow revenue growth, this isn't a restaurant stock I get very excited about from an investment perspective. There are better growth options and even better value options for investors, which is probably why shares are trading lower today. 

Travis Hoium 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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