Wendy's Co (WEN) stock analysis

P/E below its 5-year median

Wendy's's P/E of 16.4 is below its own 5-year median of 19.0.

P/E below the industry

Wendy's's P/E of 16.4 is below the Eating and Drinking Places median of 28.5.

EV/EBITDA below its 5-year median

Wendy's's EV/EBITDA of 9.4 is below its 5-year median of 11.7.

P/B above the industry

Wendy's's price-to-book of 12.78 is above the Eating and Drinking Places median of 3.13.

Trading below fair value

The share price of $8.34 is below our fair value estimate of $13.70.

Margin of safety over 20%

The price is 39.1% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 1.3% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 1.2% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -47.9% over the last twelve months, against a 5-year average of 7.0% a year.

Growing slower than the industry

Revenue grew -0.3% over the last twelve months; the Eating and Drinking Places median is 5.9%.

Guidance unchanged

The latest outlook (2026 Free cash flow, May 8, 2026) was maintained, so it neither adds nor takes away points.

Gross margin slipping

Gross margin was 62.8% over the last twelve months, against 64.5% a year earlier.

Return on equity over 15%

Return on equity was 82.9% over the last twelve months and averaged 57.7% over five years.

Return on capital under 10%

Return on invested capital was 7.3%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Wendy's's return on equity of 82.9% is above the Eating and Drinking Places median of 7.9%.

Earnings grew over 5 years

Net income grew 7.0% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 4.4% over the last twelve months, against a 5-year average of 8.9%.

Net margin above the industry

Wendy's's net margin of 4.4% is above the Eating and Drinking Places median of 1.9%.

High debt

Debt is 2204% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 409% five years ago to 2204%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 11.2% of total debt; we look for at least 20%.

Interest not well covered

Operating income covers interest expense 2.0 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 1.89 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 1.04; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Wendy's paid dividends worth 5.9% of the share price over the last twelve months.

Yield above Treasuries

The 5.9% yield is above the 4.4% on a 1-year Treasury.

Yield in the top quarter

The top quarter of US dividend payers yield 3.8% or more; Wendy's yields 5.9%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Not covered by earnings

Dividends take 96.3% of net income, leaving little room.

Covered by free cash flow

Dividends take 42.1% of free cash flow.