Here's Why You Should Retain WEN Stock in Your Portfolio Now

The Wendy's Company WEN is poised to benefit from strong comps growth, digital efforts and menu innovation. Also, the emphasis on strategic investments bodes well. However, high labor costs are a concern.WEN’s Growth CatalystsThe company continues to impress investors with robust global same-restaurant sales growth. During the first nine months of fiscal 2024, same-restaurant sales at international restaurants (excluding Argentina) rose 2.1% year over year compared with 9.4% in the year-ago period. Comps at global restaurants inched up 0.7% year over year compared with 5.2% in the prior-year quarter. Higher average checks (backed by carryover pricing) and product innovations primarily backed the upside.For fiscal 2024, the company expects global same-restaurant sales growth to be approximately 3%, consisting of 1-2% same-restaurant sales growth and contributions from new restaurants opened this year.In the fiscal third quarter of 2024, the company reported growth in digital sales globally, with about a 40% increase year over year, driven by a 17% digital sales mix delivered by its U.S. segment. International markets, including the United Kingdom, Canada and APMEA, reported strong digital adoption. During the first nine months of fiscal 2024, digital sales (as a percentage of global systemwide sales) increased approximately 17.1% compared with 12.8% in the year-ago period. The digital sales were supported by the enhancements made to the Wendy’s app that led to improved user experience.In terms of menu, the company plans to introduce fresh and innovative initiatives aimed at boosting both foot traffic and sales in 2024 and beyond. In early November 2024, Wendy’s launched the Krabby Patty Burger and Pineapple Under the Sea Frosty in regards to celebrating SpongeBob's 25th anniversary. The company is optimistic about bringing the new menu to the customers by innovating two of its iconic core menu items.WEN’s recent investment in breakfast advertising includes a national media campaign for breakfast burritos, supporting growth in the breakfast segment. Additionally, the introduction of AI-enabled voice order-taking technology offers a pathway to margin improvement by enhancing labor efficiency. This innovation allows staff to focus on tasks that improve the customer experience. Encouraged by positive testing results in select company-owned locations, the company plans to expand the implementation of this technology in 2025 to unlock further margin expansion opportunities.Concerns for WEN StockImage Source: Zacks Investment ResearchThe stock has gained 5.1% in the past three months compared with the industry’s 9.8% growth. A challenging macro environment mainly caused the downside.The company is still seeing inflationary pressures on beef and fries. While the company intends to strategically adjust select menu prices and product offerings to mitigate the challenges, potential delays in implementation and competitive pressures may hinder its ability to offset cost increases fully. For fiscal 2024, the company projects labor inflation to be within the 3-5% range.WEN’s Zacks Rank & Key PicksWendy’s currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.Deckers Outdoor Corporation DECK currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.DECK has a trailing four-quarter earnings surprise of 41.1%, on average. The stock has gained 13.5% in the past six months. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and earnings per share (EPS) indicates growth of 13.6% and 12.8%, respectively, from the year-ago period’s levels.Brinker International, Inc. EAT presently flaunts a Zacks Rank of 1. EAT has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 92.7% in the past six months.The consensus estimate for EAT’s fiscal 2025 sales and EPS indicates growth of 7.9% and 34.6%, respectively, from the year-ago period’s levels.Sprouts Farmers Market, Inc. SFM currently sports a Zacks Rank of 1. SFM has a trailing four-quarter earnings surprise of 15.3%, on average. The stock has risen 98.4% in the past six months.The Zacks Consensus Estimate for SFM’s 2024 sales and EPS indicates a rise of 12.2% and 29.6%, respectively, from the year-ago period’s levels.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. 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