Fast-food chain Wendy’s (NASDAQ: WEN) reported Q1 CY2026 results topping the market’s revenue expectations, with sales up 3.3% year on year to $540.6 million. Its non-GAAP profit of $0.12 per share was 25.1% above analysts’ consensus estimates.
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Wendy's (WEN) Q1 CY2026 Highlights:
- Revenue: $540.6 million vs analyst estimates of $518.1 million (3.3% year-on-year growth, 4.4% beat)
- Adjusted EPS: $0.12 vs analyst estimates of $0.10 (25.1% beat)
- Adjusted EBITDA: $111.3 million vs analyst estimates of $102.8 million (20.6% margin, 8.2% beat)
- Management reiterated its full-year Adjusted EPS guidance of $0.58 at the midpoint
- EBITDA guidance for the full year is $470 million at the midpoint, above analyst estimates of $464.3 million
- Operating Margin: 12%, down from 15.9% in the same quarter last year
- Free Cash Flow Margin: 8.8%, down from 12.9% in the same quarter last year
- Same-Store Sales fell 6.8% year on year (-2.1% in the same quarter last year)
- Market Capitalization: $1.32 billion
Company Overview
Founded by Dave Thomas in 1969, Wendy’s (NASDAQ: WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $2.19 billion in revenue over the past 12 months, Wendy's is a mid-sized restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale.
As you can see below, Wendy’s sales grew at a sluggish 4.4% compounded annual growth rate over the last seven years.
This quarter, Wendy's reported modest year-on-year revenue growth of 3.3% but beat Wall Street’s estimates by 4.4%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last seven years. This projection doesn't excite us and indicates its menu offerings will see some demand headwinds.
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Restaurant Performance
Number of Restaurants
Wendy's has generally opened new restaurants over the last two years and averaged 1.3% annual growth, faster than the broader restaurant sector.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Note that Wendy's reports its restaurant count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth at restaurants open for at least a year.
Wendy’s demand has been shrinking over the last two years as its same-store sales have averaged 2.5% annual declines. This performance is concerning - it shows Wendy's artificially boosts its revenue by building new restaurants. We’d like to see a company’s same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its restaurant base.
In the latest quarter, Wendy’s same-store sales fell by 6.8% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.
Key Takeaways from Wendy’s Q1 Results
We were impressed by how significantly Wendy's blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its same-store sales slightly missed. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 7.6% to $7.43 immediately after reporting.
Indeed, Wendy's had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
