Performance Remains Frosty and Recovery Assumptions Imply Big Ramp

Research evidence excerpt

Performance Remains Frosty and Recovery Assumptions Imply Big Ramp

Project Fresh stores outperformed by 310bps, that remains solidly negative. High- SSS -4.7% -3.2%↓ 1.6%

CSAT stores outperformed the lowest tier by 4-5pts. WEN has easier comparisons and Store Count 7,397 7,260↓ 7,401↓

more aggressive calendar. Biggie Deals $4/6/8 (Jan), hamburger upgrades, and late- Consensus Estimates

March chicken sandwich refresh are in market. Upcoming drivers include Monsters/

2025A 2026E 2027E

Minions collab, Pretzel Bacon Pub LTO, and new ad agency (3Q26). However, we lack

confidence in guided comp acceleration given Project Fresh store performance and EPS $0.57 $0.64

increasingly difficult environment (gas, value). Valuation

9.3% franchisee EBITDA margin is an average rather than a median, raising 2025A 2026E 2027E

risk that 5-6% closures may not be enough. WEN's CSAT and Project Fresh P/E 8.3x 12.9x 12.7x

outperformance gaps imply wide store-level profit dispersion. ~4% cost inflation and EV/EBITDA 16.4x 18.1x 17.6x

traffic declines compound at lower-AUV stores in the long tail. Tight US cattle supply

QTR. EPS Q1 Q2 Q3 Q4

also creates risk that 2H beef relief comes slower than WEN assumes. WEN reiterated

2025A $0.20 $0.29 $0.24 $0.162026 guidance, embedding 2Q system-wide sales decline and 2H growth reflecting

sequential US comp improvement plus abating closure headwinds. 2026E $0.12a $0.15 $0.12 $0.17

Capital posture suggests more internal caution than the reiterated guide. No

2026 buybacks, 2026 CapEx ~$15M below 2025, and net leverage near top of 3.5-5x. LT

guidance rightly remains in flux after being provided at the March 2025 Investor Day.

Key Changes

Target Estimates Q2 / 26E 2026E 2027E

$8.00↓ Revenue $443 $1,783 $1,800

$9.00 Previous $447 $1,777 $1,780 Our Thesis