Wendy’s (WEN) shares shot up some 10% at market open on Wednesday, July 23 amid broader meme stock frenzy, with retail traders rotating into names with elevated short interest.
The fast-food chain, with a tad above 11% of its float sold short, joined the ranks of Krispy Kreme (DNUT) and GoPro (GPRO) as speculative favorites.
Even at its intraday peak, however, Wendy’s stock was down 25% versus its year-to-date high.
While a short squeeze often comes with its own set of risks, WEN shares remain unattractive also because the Nasdaq-listed firm has been struggling to improve its fundamentals.
Wendy’s is scheduled to report its second-quarter financial results on Aug. 8. Consensus is for it to earn $0.25 a share – down from $0.27 it earned on a per-share basis in the same quarter last year.
The aforementioned concerns also made BTIG analyst Peter Saleh reiterate his “Neutral” rating on Wendy’s shares ahead of its earnings scheduled for early August.
According to Saleh, the fast-food company must commit to remodeling and modernizing its stores if it wishes to compete with the likes of McDonald’s (MCD).
That said, WEN stock is not entirely out of reasons to attract investors. For starters, it pays a super lucrative dividend yield of 5.1% at writing, particularly appealing for income investors.
Additionally, shares of the globally popular restaurant chain are currently going for a forward price-earnings (P/E) multiple of 11.7x only – not even half the 24x on its larger peer, McDonald’s.
What’s also worth mentioning is that other Wall Street analysts believe Wendy’s stock will extend gains in the second half of 2025.
Heading into its earnings release on Aug. 8, the consensus rating on WEN shares sits at “Hold” only, but the mean target of $14.17 indicates potential upside of about 30% from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
