Activists don’t make Wendy’s a buy

Article Excerpt

WENDY’S CO. $18 is a hold. The company (Nasdaq symbol WEN; Consumer sector; Shares outstanding: 214.3 million; Market cap: $3.9 billion; Dividend yield: 2.8%; Takeover Target Rating: Medium; is a leading quick-service restaurant chain with more than 7,000 locations worldwide. Founder Dave Thomas named the burger chain after his daughter Wendy. Trian Fund Management, which is Wendy’s largest shareholder with 19.2% of its shares, recently urged the company to explore a potential buyout by management or third parties. Despite rising costs for labour and commodities like beef, the activist feels that Wendy’s has a lot of room to improve profitability. This includes reducing restaurant overhead, improving operations and building up its brand. While the chance of a takeover adds appeal, the company continues to operate in a highly competitive market where more-dominant rivals continue to innovate and boost their digital presences. Wendy’s is a hold. hold…

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