McDonald’s Corporation (MCD), The Wendy’s Co (WEN): Are These Two Stocks Overvalued?

What is The Wendy’s Co (NASDAQ:WEN) doing to bring customers back into restaurants? It is reviving its Fish Fillet sandwich, which is expected to generate higher-than-expected income for the specified period. It admittedly did the same thing last year when it released Dave’s Hot ‘N Juicy burger to much success.

To further strengthen its position as a premium burger shop, it is also testing the introduction of a bread bun shaped like a pretzel. The bun was sold as a Pretzel Bacon Cheeseburger in Miami, where it was available during the testing period. Its sales were successful, and the price of $0.99 was well received.

But, the momentum has been largely felt on the Street. The stock is now up more than 35% from the 52-week low, and it trades at 27.5 times forward earnings. But it is just starting to move into profitable territory. I find the stock overly expensive right now and with little clarity over growth.

Conclusion

In my view, McDonald’s Corporation (NYSE:MCD) and The Wendy’s Co (NASDAQ:WEN) are expensive stocks right now. Both have already saturated much of the market, and consumers are looking for a different bite to eat. The sudden rise of Chipotle, Panera, and Buffalo prove that new is often better. Unfortunately, McDonald’s and Wendy’s are just not that and at current prices, they appear overvalued.

The article Are These 2 Stocks Overvalued? originally appeared on Fool.com and is written by David Gould.

David Gould has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings and McDonald’s. The Motley Fool owns shares of Buffalo Wild Wings and McDonald’s. David is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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