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Shares of Wendy’s Co. slumped Thursday, after the fast-food burger chain reported fourth-quarter profit that disappointed Wall Street, amid higher cloud-computing costs, and provided a 2024 outlook that was below forecasts.
The company also announced investments to boost growth, including $55 million in breakfast advertising, $15 million to support digital growth through mobile-app enhancements and $30 million for the rollout of digital menu boards.
The stock
WEN,
dropped 1.6% in premarket trading. That would mark the third straight quarter the stock fell the day quarterly results were reported.
Net income rose to $46.9 million, or 23 cents a share, from $41.3 million, or 19 cents a share, in the same period a year ago.
Excluding nonrecurring items, adjusted earnings per share slipped to 21 cents from 22 cents, due to higher amortization of cloud computing arrangement costs and a higher tax rate, and missed the FactSet consensus of 23 cents.
Revenue grew 0.8% to $540.65 million, amid higher advertising funds revenue and an increase in royalty revenue, but was below the FactSet consensus of $546.8 million.
Same-restaurant sales, or sales of restaurants open at least a year, increased 3.2% to beat expectations of 2.5% growth, with U.S. growth of 2.3% topping forecasts for a 1.8% rise.
Wendy’s spent $45.7 million during the quarter to buy back 2.4 million shares, but said it has not repurchased any shares so far this year. As of Feb. 15, the company had authorization to repurchase up so $310 million worth of its shares.
For 2024, the company expects adjusted EPS of 98 cents to $1.02, which is below the FactSet consensus of $1.11.
Free cash flow is expected to be $280 million to $290 million, up from $274.3 million in 2023 and above expectations of $275.2 million.
The stock has tacked on 1.4% over the past three months through Wednesday, while the S&P 500
SPX,
has gained 11.1%.
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