Investors Put Faith in The Wendy’s Co (WEN)

The difficult road ahead
But it might not work. Wendy’s has been laboring under its “Image Activation” plan since 2011, and the business hasn’t really expanded by leaps and bounds. In its most recent announcement, Wendy’s also announced that it’s going to sell off about 425 locations, putting them in the hands of franchise operators. That, at least, seems like a straightforwardly great move. The extra cash will give the company more to work with, and the stability of franchise income makes investors happy.

The only question now is, “Is it worth it?” The stock is trading at a heavy premium because of its “imminent” turnaround. I’m not tempted. There are other businesses — Starbucks Corporation (NASDAQ:SBUX) and Panera Bread Co (NASDAQ:PNRA) come to mind — that are doing very well, cost less, and seem like a smaller risk. For now, I’m sticking with well-defined businesses. Maybe in three years, The Wendy’s Co (NASDAQ:WEN) will be something other than a company in transition, but I’m not going to hold my breath.

The article Investors Put Faith in Wendy’s originally appeared on Fool.com and is written by Andrew Marder.

Fool contributor Andrew Marder owns shares of Barclays. The Motley Fool recommends Burger King Worldwide, McDonald’s, Panera Bread, and Starbucks and owns shares of McDonald’s, Panera Bread, and Starbucks.

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