Wendy’s announced an 11% increase in its quarterly dividend.
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Wendy’s first-quarter results were all that and a side of fries. The fast-food chain turned in higher earnings than expected, raised its financial forecasts, and said it would increase its dividend. The shares are climbing in response.
Wendy’s stock was up 5% to $23.95 in early trading. The shares are up 4% year to date and have risen 9.7% in the past 12 months.
Wendy’s (ticker: WEN) said it earned $41.4 million, or 18 cents a share, up from 6 cents a share in the year-earlier period. Adjusted earnings, which exclude nonrecurring items, were 20 cents a share. Revenue grew 13.6% to $460.2 million, while analysts were looking for EPS of 15 cents from revenue of $445.3 million.
Same-restaurant sales climbed 13%, ahead of the 9.6% consensus estimate, while the U.S. operation achieved a gain of 13.5%.
In addition, the company announced an 11% increase in its quarterly cash dividend to 10 cents, payable on June 15. Wendy’s board of directors also added $50 million to the share-repurchase plan, bringing the total to $150 million. The company said it bought back $56 million in stock in the first quarter.
Looking ahead, Wendy’s said it expects to earn an adjusted 72 cents to 74 cents a share for the full year, up from its prior forecast of 67 cents to 69 cents. It sees global sales growing 8% to 10%, compared with its prior forecast of 6% to 8%.
Restaurants have been on a tear in recent months, as government stimulus, vaccine rollouts, and pent-up demand mean more people are eating out. Wendy’s is a good example of that trend.
The report was strong across the board, with same-store sales coming in above expectations in the U.S. and abroad and an upbeat tone from management about trends in the second quarter and beyond. The fact that the company is returning more cash to shareholders is another indication about its confidence going forward.
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