Wendy`s Co. (NASDAQ: WEN) reported its preliminary unaudited fourth-quarter earnings results on Tuesday. Profit rose by operating fewer of its own restaurants and the supply of 4 for $4 value bundle.
The quarterly results marked the company`s revenue drop while beat the earnings estimates at the same time. According to the report, Revenues in the fourth quarter of 2015 decreased to $464.4million, 4.7 percent lower than the same period of last year. The decrease primarily came from the 363 fewer Company-operated restaurants in the period. The quarterly Adjusted Earnings per Share from continuing operations were $0.12, beating Thomson Reuter`s consensus estimates of $0.11.
Emil Brolick, the CEO of Wendy`s Co., said in the press release, “Our strong 2015 results demonstrate the strength of our core business, as well as the positive impact of our transition to a predominantly franchised model, with royalties and rental income contributing a higher amount of earnings.”
Most restaurant chains choose to transit into a franchise-based morel for a more stable cash flow and higher profits. Wendy's plans to sell about 315 more restaurants during 2016, sacrificing the short-term revenue for the long-term strong gains. Analysts shows positive expectations for the company in a long run, hoping the management can get rid of the company-owned stores. The average target prices have rose to $12 per share, 15% higher from current levels of around $10.
However, opinions are mixed in the short term. The earnings beat failed to send Wendy`s shares to a higher value. The stock price has soared to $10.50 in morning`s trading right after the opening, but plummeted to around $9.7 thereafter. Perhaps currently it is too hard for stocks to be immune from the declines in the struggling global markets.