WEN
WEN
Hold 2026-04-06
Model
DCF
Price at Report
$6.88
Base IV
$10.42
Bear IV
$-0.71
Bull IV
$27.35
Entry Zone: -1-10 · Sell Above: 23
Bore Family Office
Valuation Report — The Wendy's Company (WEN) • April 6, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 6.40% • Current Price: $6.88
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
The Wendy's Company is the world's third-largest quick-service hamburger restaurant chain, operating and franchising approximately 7,200 restaurants across the US and 30+ countries. The business is ~97% franchised, generating revenue primarily through royalties (4-5% of franchisee system sales), property rents, and company restaurant operations; this asset-light model provides high FCF margins (~11%) relative to traditional restaurant operators. However, WEN faces intensifying competition from McDonald's value menu, Burger King, and fast-casual alternatives (Shake Shack, Chipotle), contributing to declining traffic and restaurant counts; the company cut its dividend by 33% in early 2025, a clear signal of financial stress under a $3.8B net debt burden that consumes most discretionary cash flow. The company is managed by Trian Fund Management (Nelson Peltz), which holds ~12% and has pushed for operational improvements and shareholder return optimization.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| US Franchise Restaurants | $1,650M | 76% | -4.0% | — | Primary royalty + rent revenue |
| International Franchise | $200M | 9% | +4.0% | — | Canada, UK, Philippines, etc. |
| Company-Operated Restaurants | $327M | 15% | -2.0% | — | Mostly legacy; rightsizing |
| Blended Growth Rate | — | 100% | -3.0% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 5 — Capital Return (with Stage 6 Risk): Mature business returning capital via dividends and buybacks. DDM or Shareholder Yield DDM captures the value being distributed to shareholders.
Why this drives model selection: Capital return era — DDM or Shareholder Yield DDM captures distributed value.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 5.8% | <8% weak |
| FCF Margin | 11.2% | ≥10% strong |
| Debt / EBITDA | 5.7x | >4x elevated |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Downward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $1,897 | $2,096 | $2,182 | $2,246 | $2,177 |
| Rev YoY Growth | — | +10.5% | +4.1% | +2.9% | -3.1% |
| Gross Margin | 67.7% | 63.1% | 63.6% | 65.1% | 63.6% |
| EBITDA ($M) | $572 | $599 | $684 | $699 | $675 |
| EBITDA Margin | 30.2% | 28.6% | 31.3% | 31.1% | 31.0% |
| Operating Income ($M) | $446 | $463 | $535 | $541 | $504 |
| Operating Margin | 23.5% | 22.1% | 24.5% | 24.1% | 23.2% |
| Net Income ($M) | $280 | $287 | $358 | $364 | $326 |
| Net Margin | 14.8% | 13.7% | 16.4% | 16.2% | 15.0% |
| EPS (diluted) | $0.89 | $0.82 | $0.97 | $0.95 | $0.85 |
| Free Cash Flow ($M) | $268 | $174 | $260 | $261 | $243 |
| Annual DPS | $0.430 | $0.500 | $1.000 | $1.000 | $0.670 |
| Total Debt ($M) | $3,856 | $4,282 | $4,140 | $4,093 | $4,145 |
💹 Capital Return & Share Count Analysis
Net Share Change
-13.8% (2021→2025)
📉 Net reduction — buybacks exceed issuances
EPS Amplification
EPS grew -4.5% vs net income +16.4% over the period — -20.9pp of EPS growth diluted by share issuance.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2021 | 224.0M | — | $273 | 17.7% |
| 2022 | 216.0M | -3.6% | $55 | 3.7% |
| 2023 | 212.0M | -1.9% | $193 | 13.2% |
| 2024 | 206.0M | -2.8% | $82 | 5.8% |
| 2025 | 193.0M | -6.3% | $204 | 15.4% |
WEN has been an active but lumpy buyback program — reduced shares from 224M to 193M (-13.8% over 4 years) with buyback spend ranging from $55M to $273M/yr. The $204M buyback in FY2025 alongside the dividend cut suggests management prioritizing per-share metrics over total return; with only $243M FCF and $126M interest expense, the capital allocation framework is strained — debt reduction should precede buybacks.
📈 DCF Scenarios
$-1
🔴 Bear
$10
📊 Base
$27
🚀 Bull
$6.88
Current Price
$9
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -2.0% | 1.0% | 1.5% | 6.40% | $-1 | ▼110.3% |
| 📊 Base | 3.0% | 2.5% | 2.0% | 6.40% | $10 | ▲51.4% |
| 🚀 Bull | 7.0% | 4.5% | 2.5% | 6.40% | $27 | ▲297.6% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -2.0% | Stage 2: 1.0% | Terminal: 1.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.20B | $0.19B | $0.19B |
| Year 2 ✦ | Stage 1 | $0.20B | $0.17B | $0.36B |
| Year 3 ✦ | Stage 1 | $0.19B | $0.16B | $0.52B |
| Year 4 ✦ | Stage 1 | $0.19B | $0.15B | $0.67B |
| Year 5 ✦ | Stage 1 | $0.20B | $0.14B | $0.81B |
| Year 6 | Stage 2 | $0.20B | $0.14B | $0.95B |
| Year 7 | Stage 2 | $0.20B | $0.13B | $1.08B |
| Year 8 | Stage 2 | $0.20B | $0.12B | $1.20B |
| Year 9 | Stage 2 | $0.20B | $0.12B | $1.31B |
| Year 10 | Stage 2 | $0.20B | $0.11B | $1.42B |
| Terminal | — | TV=$4.2B | PV(TV)=$2.3B (62% of EV) | EV=$3.7B |
| Intrinsic Value | — | — | EV $3.7B − Net Debt → Equity / Shares | $-1 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (6.40%) to get its present value. After Year 10, FCF grows at the terminal rate (1.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $4.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $2.3B). Enterprise Value = PV of FCFs ($1.4B) + PV of TV ($2.3B) = $3.7B. Subtracting net debt gives equity value of $-0.1B, divided by shares outstanding = $-1 per share.
Base Scenario
Stage 1: 3.0% | Stage 2: 2.5% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.24B | $0.23B | $0.23B |
| Year 2 ✦ | Stage 1 | $0.25B | $0.22B | $0.45B |
| Year 3 ✦ | Stage 1 | $0.26B | $0.22B | $0.66B |
| Year 4 ✦ | Stage 1 | $0.27B | $0.21B | $0.87B |
| Year 5 ✦ | Stage 1 | $0.28B | $0.20B | $1.07B |
| Year 6 | Stage 2 | $0.28B | $0.19B | $1.27B |
| Year 7 | Stage 2 | $0.29B | $0.19B | $1.45B |
| Year 8 | Stage 2 | $0.30B | $0.18B | $1.63B |
| Year 9 | Stage 2 | $0.30B | $0.17B | $1.81B |
| Year 10 | Stage 2 | $0.31B | $0.17B | $1.98B |
| Terminal | — | TV=$7.2B | PV(TV)=$3.9B (66% of EV) | EV=$5.9B |
| Intrinsic Value | — | — | EV $5.9B − Net Debt → Equity / Shares | $10 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (6.40%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $7.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $3.9B). Enterprise Value = PV of FCFs ($2.0B) + PV of TV ($3.9B) = $5.9B. Subtracting net debt gives equity value of $2.0B, divided by shares outstanding = $10 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 7.0% | Stage 2: 4.5% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.27B | $0.25B | $0.25B |
| Year 2 ✦ | Stage 1 | $0.29B | $0.26B | $0.51B |
| Year 3 ✦ | Stage 1 | $0.32B | $0.27B | $0.78B |
| Year 4 ✦ | Stage 1 | $0.34B | $0.27B | $1.05B |
| Year 5 ✦ | Stage 1 | $0.37B | $0.27B | $1.32B |
| Year 6 | Stage 2 | $0.39B | $0.27B | $1.59B |
| Year 7 | Stage 2 | $0.40B | $0.26B | $1.85B |
| Year 8 | Stage 2 | $0.42B | $0.26B | $2.11B |
| Year 9 | Stage 2 | $0.44B | $0.25B | $2.36B |
| Year 10 | Stage 2 | $0.46B | $0.25B | $2.61B |
| Terminal | — | TV=$12.1B | PV(TV)=$6.5B (71% of EV) | EV=$9.1B |
| Intrinsic Value | — | — | EV $9.1B − Net Debt → Equity / Shares | $27 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (6.40%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $12.1B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $6.5B). Enterprise Value = PV of FCFs ($2.6B) + PV of TV ($6.5B) = $9.1B. Subtracting net debt gives equity value of $5.3B, divided by shares outstanding = $27 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 4.4% | $29 | $37 | $50 | $71 | $115 |
| 4.9% | $22 | $27 | $35 | $47 | $67 |
| 5.4% | $17 | $20 | $26 | $33 | $44 |
| 5.9% | $12 | $15 | $19 | $24 | $31 |
| 6.4% | $9 | $11 | $14 | $17 | $22 |
| 6.9% | $6 | $8 | $10 | $13 | $16 |
| 7.4% | $4 | $5 | $7 | $9 | $12 |
| 7.9% | $2 | $3 | $5 | $6 | $8 |
| 8.4% | $0 | $1 | $2 | $4 | $5 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E (fwd) | EV/EBITDA | FCF Yield | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Wendy's | WEN | 11.7× | 5.7× | 18.3% | 9.7% | Current — highly leveraged |
| McDonald's | MCD | 25.8× | 20.5× | 3.9% | 2.4% | Premium; global scale |
| Restaurant Brands | QSR | 17.2× | 15.2× | 5.9% | 3.5% | BK, Tim Hortons, Popeyes |
| Jack in the Box | JACK | 9.5× | 7.8× | 9.2% | 5.5% | Small; similar leverage |
| WEN 5-yr avg | — | 22.4× | 15.8× | 8.1% | 5.8% | Historical (ex-cut year) |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $0.89 | — | — | — | Actual |
| 2022 | $0.82 | — | — | — | Actual |
| 2023 | $0.97 | — | — | — | Actual |
| 2024 | $0.95 | — | — | — | Actual |
| 2025 | $0.85 | — | — | — | Actual |
| 2026 | $0.53 | $0.59 | $0.63 | 30 | Estimate |
| 2027 | $0.54 | $0.67 | $0.83 | 27 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $1.9B | — | — | — | Actual |
| 2022 | $2.1B | — | — | — | Actual |
| 2023 | $2.2B | — | — | — | Actual |
| 2024 | $2.2B | — | — | — | Actual |
| 2025 | $2.2B | — | — | — | Actual |
| 2026 | $2.0B | $2.2B | $2.4B | 30 | Estimate |
| 2027 | $2.0B | $2.2B | $2.4B | 27 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Jim Salera | Stephens & Co. | Hold | $8 | +16.3% |
| Logan Reich | RBC Capital | Hold | $8 | +16.3% |
| Dennis Geiger | UBS | Hold | $8 | +9.0% |
| Rahul Krotthapalli | JP Morgan | Hold | $7 | +1.7% |
| Christine Cho | Goldman Sachs | Strong Sell | $7 | +1.7% |
💡 Investment Thesis
- Deep value setup at $6.88 — WEN trades at 11.7× 2026E EPS ($0.59) and 5.7× EV/EBITDA; with FCF yield ~18%, the cash generation is strong but mostly consumed by debt service ($126M/yr interest) and dividends ($130M/yr). Any positive catalyst (traffic recovery, strategic transaction) could re-rate significantly.
- Asset-light franchise model with high FCF conversion — 97% franchised structure means capex is minimal ($102M/yr maintenance); FCF margins of 11%+ are durable even in downturns because royalty streams are contractual, not volume-dependent.
- Trian Fund ownership creates strategic optionality — Nelson Peltz's ~12% stake and board presence means WEN will not be allowed to drift; a sale to a PE firm or strategic buyer ($10-12/share) is a plausible tail scenario.
- Dividend reset improves financial flexibility — the FY2025 dividend cut from $1.00 → $0.67 reduces annual outflow by $67M, improving FCF coverage; while negative near-term, it reduces the probability of further balance sheet stress.
- Analyst consensus implies 29% upside — average PT $8.88 vs current $6.88; even the Goldman Sachs Strong Sell ($7) implies limited downside from here.
👔 Management Quality & Culture
CEO: Emil Brolick · Tenure: Since 2024 (~2 yrs) · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
+4,062,272 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Wendy’s CEO History: From Thomas to Cook
After 11 years at Yum! Brands (where he revitalized Taco Bell), Brolick returned to his Wendy’s roots. He’d worked under Dave Thomas himself and understood the brand’s DNA better than anyone.
After 11 years at Yum! Brands (where he revitalized Taco Bell), Brolick returned to his Wendy’s roots. He’d worked under Dave Thomas himself and understood the brand’s DNA better than anyone.
The Wendy's Company - Wikipedia
Peltz served as CEO of the company from 1993 through 2007, during which time the company sold several of its subsidiaries in order to focus on their food and beverage operations. In August 1995, Triarc purchased Mistic Bran
Peltz served as CEO of the company from 1993 through 2007, during which time the company sold several of its subsidiaries in order to focus on their food and beverage operations. In August 1995, Triarc purchased Mistic Bran
The Wendy's Story | Wendy's
Later named the Brolick Innovation Center after former Wendy’s President & CEO Emil Brolick, the innovation center was built to provide a creative space for culinary ideas to come to life and for customers to participate in research-bas
Later named the Brolick Innovation Center after former Wendy’s President & CEO Emil Brolick, the innovation center was built to provide a creative space for culinary ideas to come to life and for customers to participate in research-bas
Capital Allocation & Strategy
THE WENDY'S COMPANY REPORTS FOURTH QUARTER AND FULL-YEAR 202
The Company updated its capital allocation policy and announced a new target dividend payout ratio of 50% to 60% of adjusted earnings and plans to repurchase up to $200 million of its shares in 2025.
The Company updated its capital allocation policy and announced a new target dividend payout ratio of 50% to 60% of adjusted earnings and plans to repurchase up to $200 million of its shares in 2025.
The Wendy's Company - THE WENDY'S COMPANY REPORTS FOURTH QUA
The Company updated its capital allocation policy and announced a new target dividend payout ratio of 50% to 60% of adjusted earnings and plans to repurchase up to $200 million of its shares in 2025.
The Company updated its capital allocation policy and announced a new target dividend payout ratio of 50% to 60% of adjusted earnings and plans to repurchase up to $200 million of its shares in 2025.
Employee Ratings
Overall Rating
3.2/5 ★★★☆☆
Culture Signal
Mixed
✅ Strengths
- recommend
Employee Review Excerpts
Wendy's - Corporate office is a great place to work | Glassd
Oct 18, 2025 · Manager · Former employee, more than 10 years · East Rutherford, NJ · Recommend · CEO approval · Business outlook · Pros · There is no pros working here · Cons · No diversity. The district manager did not have a college degre
Oct 18, 2025 · Manager · Former employee, more than 10 years · East Rutherford, NJ · Recommend · CEO approval · Business outlook · Pros · There is no pros working here · Cons · No diversity. The district manager did not have a college degre
Wendy's Reviews (13,565): Pros & Cons of Working At Wendy's
How satisfied are employees working at Wendy's?52% of Wendy's employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Wendy's 3.2 out of 5 for work life balance, 3.1 for cu
How satisfied are employees working at Wendy's?52% of Wendy's employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Wendy's 3.2 out of 5 for work life balance, 3.1 for cu
Wendy's Reviews in Los Angeles | Glassdoor
Amazing culture. Can’t imagine being at any other chain · Cons · The workload can be daunting · Show more · Sign in to see more insights · 4.0 · Oct 27, 2025 · Cashier · Former employee · Los Angeles, CA · Recommend · CEO a
Amazing culture. Can’t imagine being at any other chain · Cons · The workload can be daunting · Show more · Sign in to see more insights · 4.0 · Oct 27, 2025 · Cashier · Former employee · Los Angeles, CA · Recommend · CEO a
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Hold — The Wendy's Company (WEN)
Current price: $6.88 | Analyst Avg PT: $8.88
$-1
🔴 Bear
$10
📊 Base
$27
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$10 | Begin position |
| Tier 2 — Add | ≤$5 | Add on weakness |
| Tier 3 — Full | ≤$-1 | Full allocation |
| Sell Alert | ≥$23 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Hold WEN — the stock is in deep value territory but the risks are real: $3.8B net debt (5.7× EBITDA), declining traffic, a dividend that was just cut, and consensus EPS declining 31% in 2026. The base case IV (~$8) implies modest upside. A starter position is justified at $6-7 for high-risk-tolerant income investors who believe the franchise model and Trian ownership provide a floor. Do not add to a full position until traffic comps turn positive. Immediate Sell trigger: debt covenants breached or further dividend suspension.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection — DCF only | DDM/Shareholder Yield DDM explicitly ruled out: (1) Dividend was CUT 33% in FY2025 — dividend is not "stable or growing"; (2) Balance sheet NOT clean — Debt/EBITDA = 5.7× (threshold for Shareholder Yield DDM is <3×); (3) Buybacks are lumpy and financially irresponsible given current leverage. Lifecycle Stage 5 with Stage 6 risk assigned. DCF captures normalized FCF potential without being distorted by the impaired dividend. |
| WACC Build | β = 1.5 (highly leveraged QSR; consumer sensitivity + financial risk). Ke = 4.3% + 1.5 × 5.5% = 12.55% → 12.0%. Kd = 5.5% × (1-0.16) = 4.62% (effective rate on WEN debt; sub-IG quality). We = 24.4%, Wd = 75.6% → WACC = 6.40%. Note: Low WACC reflects heavy debt weighting (75.6% of capital is tax-advantaged debt); equity holders bear the leveraged risk in the Ke component. |
| FCF Base | FCF base = $243M (FY2025 actual). 3yr avg (2023-2025) = ($260+$261+$243)/3 = $255M. Using $243M as it reflects current trajectory. After interest ($126M), remaining FCF of ~$117M must cover dividends ($130M); FCF barely covers distributions. Base scenario growth anchored to 3% — modest traffic recovery + royalty expansion. |
| Critical Risk: Debt Load | $3.84B net debt at 5.7× EBITDA is the dominant risk. WEN's debt matures in tranches 2029-2031; refinancing at current rates would increase interest expense materially. The bear case prices in flat/declining FCF with no debt reduction — the equity could be worth very little if EBITDA contracts toward $500M (debt coverage breaks). |
| Strategic Option Value | The bull case $14 reflects M&A/strategic review value: 97% franchised, iconic brand, ~$670M EBITDA, 7,200 units — a PE buyer at 10× EBITDA would pay $6.7B EV, implying $2.6B equity value = ~$13.5/share. This is the primary upside scenario but requires a buyer. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.