Wendys

Buenas

Os copio este comentario del usuario   mrmrmrj de Reddit.
Me ha gustado bastante y me ha parecido suficiente para ponerla bajo el radar

 

 I really like it when I find a company with a basic, reliable business with a cratering valuation. $WEN has traded at 12-13x cash flow since 2013 (as far back as I looked). There is nothing magical about Wendy's but it is solidly profitable and generates good cash flow. It was highlighted in Barron's today as an underperformer in the fast food sector. It is down almost 50% this year. 

 What happened? Management doubled to dividend in 2023. Then slashed it back slightly above 2022's level. Revenues have been declining recently, mostly from slowing sales at US locations. 20% of stores are international franchises and that is where the growth is coming from. 

 Revenue declines are not good, obviously, but all of these fast food chains go through slow periods from time to time. It is always fixed with menu changes, promotions, something. 

 What I think happened is that management got a bit lazy, buying back a lot of stock over the last decade ( from over 400mm shares in 2009 to under 200 million now), to keep squeezing EPS higher. Probably took their eye off the ball. The doubling of the dividend in 2023 was an odd decision but that's over now. The new dividend is still an increase from 2022. 

 This is not a great business, but it revenue growth can be re-booted and the valuation will go back at least to 8-9x cash flow when that happens. Combine those two, and this is a double in 4-5 years with almost no downside risk. 

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