Wendy's $WEN (-4,46 %)
Stock analysis - Fresh 2.3% defensive dividend?
Hi folks!
Today I'm going to introduce you to my favorite magazine: The Wendy. It contains fundamental analyses of agricultural economics using the example of horse breeding and assumes a distinguished-cascading mindset for investing in this industry. As a rule, the following points can be found in every magazine, which underpin distinctiveness as mentioned above (cf. (1)):
- Aesthetics of the investment object "horse".
- Occupational safety using the example of rules of conduct against horses
- Interaction of various investment goods and resulting responsibility of the operator to maximize the input-output investment ratio
- Prominent horse breeders using the example of the girls of the Pinto Ranch
- Niche knowledge of horse breeding and implications for future price-performance design
- Endowed prize-giving in the context of an aesthetic competition of professional riders
Cascading is the journal therefore that all acquired knowledge builds on each other. Using (1) as an example, the structural discussion of wild horses in general is shown for starters. What are wild horses and what are their requirements for maintenance? What is their value? Subsequently does the question of special subspecies of wild horses on the basis of so-called "Cape" horses, better known as "Boerpferd" (cf. (1), (2)).
The Boer horse grows up to 1.58m high, is bred mainly in South Africa and is largely unproblematic in character. In general, Boer horses tend to be non-aggressive, enjoy being with familiar people, and are generally considered calm animals with a positive attitude toward people. Their use ranges from loose rides in leisure time to use as professional riding horses, since in earlier times Boer horses were often used as mounts in warlike conflicts. Advantageous here is the mentioned smaller size, which makes it more agile compared to larger horses and in parallel also requires less feed input relatively (cf. ibid.).
The booklet continues with explanations on the subject of occupational safety using the example of dog-horse interaction and points out.....
Okay I'll leave the flat joke with Wendy's now and we'll start our analysis of Wendy's now immediately. I actually have no idea about horses and of course I won't reveal my favorite magazine here :) .
First, as always, my disclaimer and the analysis structure:
Disclaimer: This is not investment advice. It is also not an invitation to buy/sell financial products. I am merely stating my opinion here. You have your own responsibility towards your investments. No liability.
I order my analysis as follows:
1.Wendy's in facts, figures and data.
1.1 Who is Wendy's? Analysis via branch network, target group marketing, dining culture and colabs.
1.2 Analysis of the Wendy's share - the better McDonald's?
2.my opinion about Wendy's
Wendy's in facts, figures and data 1.1 Who is Wendy's? Analysis via branch network, target group marketing, dining culture and Colabs
Founded in Ohio on November 15, 1969 by Dave Thomas in reference to his daughter's nickname, Wendy's is still considered exceptional today due to various factors surrounding its products as well as sales and marketing. One of the cleverest tricks of Wendy's is the meatballs on the hamburgers, which are made square and as fresh as possible. Furthermore, if you thought that the McDrive was the first takeaway hotspot at a fast food company - you were wrong.
The first McDrive was established in Arizona on January 24, 1975. Wendy's was a pioneer in takeaway and had to explain to people how to press the takeaway button and how to place their order properly (see (3), (4), (5)).
Now that you have exclusive fast food knowledge you are just as cool as me and can go impress women with it! Feel free to follow me for more pickup lines!
Despite being tied to the fast food sector, the product portfolio is structured a bit differently than what you know from McDonald's and Co. in Germany and especially puts an emphasis on breakfast instead of sprawling main dish options. In addition to combination offers, sandwiches can also be found isolated as a separate product, as well as side dishes and coffee on the menu. The breakfast cluster is thus quite comprehensive and includes 6 different configurations of side dish plus sandwich plus drink in the standard. If you like it different, the menus tend to be interchangeable as well for an additional charge. However, if you compare the prices, you will notice that standard offers are the best value (see (6), (7)).
I am aware that most of you will probably not be able to do anything with the dishes for breakfast. Therefore, for this analysis of pricing, I choose what I would be most likely to order.
So, naturally, we're choosing the Breakfast Baconator Combo and.....no. We'll go with the Bacon Egg & Cheese Croissant Combo instead of the Overkill breakfast menu, of course. Since the group's main page doesn't have any prices, I'm relying on the accuracy of an external page from (8). What strikes me immediately is that the prices are shockingly good compared to what one is used to here in terms of pricing (cf. ibid., (8).
While the Breakfast Baconator Combo Overkill costs "only" just under $4, our selected Bacon Egg & Cheese Croissant offer is even only $3.59. For that, though, you have to hit Wendy's between 6:30 a.m. to 10:30 a.m., similar to ours. What also stands out is the fact that breakfast can be delivered via UberEats or Doordash for a small additional charge. This means that you are no longer tied to the opening hours. We can therefore conclude that Wendy's is not pursuing an exclusive "come to the store or just leave it alone" concept, but is available to a broad (höhö) audience via networking through apps. This is of crucial importance, because the relatively good pricing must be refinanced via placement of the goods on the market (see (8)).
Huh?
You Yank. You want burger. You no want to drive long. Du nix trust dubious new chain store. Where you land?
Most likely at McDonald's. Figure (9) shows the map of the U.S. with one logo per McDonald's store in each state. In total, McDonald's had 13,673 restaurants in the U.S. in 2020. Looking at (9) and (10) together, we see an enormous dominance of our well-known top dog in the USA (cf. (9), (10)).
How many does Wendy's have?
Wendy's, with 5,893 stores in 2,627 cities in 51 states, is below McDonald's distribution. It is important to note, however, that Wendy's has a strong focus on the eastern United States. It's notable that states like Maine, South Carolina, Virginia and Florida are massively overrepresented, while states like North Dakota and Montana play virtually no role in the store network. This is fundamentally important for Wendy's, as we see a different strategy than McDondalds, where virtually every state is almost evenly penetrated (see (9), (10), (11)).
Can this be done more accurately?
Let's take a look at Wendy's top 10. These are in descending order (cf. (11)):
- Florida
- Texas
- Ohio
- Georgia
- California
- North Carolina
- Pennsylvania
- Michigan
- Virginia
- New York
If we live in Florida, of the 21.48 million inhabitants, every set of 41,067 people have a Wendy's to themselves. To that end, Wendy's assigns 9% of its store network in the form of 523 restaurants to that state. In the case of Texas - an anchor state for competitor McDonald's - Wendy's allocates 7% of its store network in the form of 435 stores. Thus, of the 29 million residents, 29 million / 435 stores = 66,667 people have a Wendy's to themselves. おはよう is in third place with a rounded 7% and 401 stores as well, serving 29,150 people per store (cf. ibid.).
Why is this triad of state residents, branch number/inhabitants and use of the branch contingent so important?
Basically, it shows the availability of goods per inhabitant and makes a competitive analysis possible. We remember the example from above. To say whether a potential customer who does not know Wendy's will become a customer of our group, presence and availability plays a significant role.
Now let's do some math against McDonald's numbers. McDonald's, with its network of stores, has 7,450 more points of contact than Wendy's, and also has an additional presence in 1,980 cities and can be found in 54 states. Wendy's only in 51 with the lower penetration in the central or western U.S. described above. To compare how McDonald's performs in Wendy's top 3 states, I select data from Florida, Texas, and おはよう (Ohio) only.
In Florida, there is one McDonald's for about 25,000 residents with a store contingency of 6%. What does this mean for Wendy's? The following observations are already apparent now:
- Even in the strongest state of Florida, Wendy's does not stand a chance against McDonald's quantitatively on store count.
- There is a risk of market displacement
- Wendy's puts a focus on 2 out of 3 of the top 5 states in terms of population
While Florida boasts a square mileage of 170,314 QKM, Texas is as high as 695,676 QKM. That alone tells us nothing about whether Wendy's can properly reach its customers. Anyone who has ever been to desert states or the Canary Islands knows about the long bus routes or walks you can take through the sand. What usually means relaxation, Mediterranean climate and pure vacation joy for vacationers is usually a nightmare for fast food operators or entrepreneurs in the tourism sector (see (12), (13)). So, too, in this case. Although Texas represents 4.08 times the square kilometer area, the population is not proportional to this. Using a simple rule of three, this would mean that Texas would have to have more than four times the number of citizens because of the fourfold area. But it does not. This metric is very crucial for the construction of new fast food outlets. Let's assume the population was indeed four times that. Florida currently has 16.397 million residents. Texas is four times larger. So we would be at 16.397*4.08 = 66.9 million residents. In this case, Texas and Florida would have the same area per capita, and Texas would obviously be the better deal because it would have more potential customers (see ibid., own calculation).
What does reality look like?
In reality, Texas has just 21.352 million inhabitants, which is less than one third of the calculated population according to the state-to-inhabitant ratio. In addition, similar to the elections, the states are divided into individual districts, whereby the radius method is used to avoid competitive effects between fast food outlets (see ibid.). Is Texas therefore a bad choice for Wendy's because it has a large area but tends to have fewer potential customers?
Source (13) explicitly underpins the major problem for fast food chains in relation to the top 2 state of Texas. If we count all districts together, we come to 12 districts that have more than 5,000 residents per square mile. However, Texas has 254 districts. What does this mean (cf. ibid., cf. (12), (13), (14)).
100*(12/254) = 4.7% of the districts are densely populated. That is, densely populated. The absolute majority of other districts are at most 250 residents per square mile at the maximum.
In fact, there is a strong focus on a few districts
There is a lack of reasonably even distribution
Wendy's store network is, in my opinion, shockingly well adapted to this population structure or regional distribution
Even the smallest and westernmost hotspot of Texas on the New Mexico border has more than 5 Wendy's stores
If you're interested in the topic, you might want to cross reference the source from Scrapehero and Wikiwand. Unsurprisingly, you'll find that this nearly 5% of districts in particular are affected by a broad Wendy's store network. This tends to be logical and avoids unnecessary spending on low turnover in sparsely populated areas. Other fast food chains nevertheless use sparsely populated areas in order to at least be able to pick up sales there, even if they are not too high (see (11), (13)).
Much more exciting is the last point with the western hotspot of Texas. I actually did some research on this and it is the district with the border city of "El Paso" near Socorro. The city is so relevant because it is on the border with Mexico and yet it is an immense hotspot for Wendy's. This has been surprising to me in that the competition for sandwiches and burgers is particularly fierce here. Wendy's is not alone here and gets competition from a Mexican fast food giant (see (11), (14)).
If you google this main competitor of many fast food companies, you will find surprisingly fast and clearly already on the first page "El Paso" with 9 stores. What do you think - out of 115 specified locations and 280 branches of this company ONLY in Texas....how does El Paso stand with that? Is the place insignificant or significant (see ((15),(16)).
The answer is VERY significant. Only 4 of the 115 places indicated have a higher number of branches in the city indicated. For example, Dallas with 20 branches (cf. (16)).
But what weird company are we talking about here and why is it so important?
Chipotle. In a nutshell, we're talking about Chipotle as a provider of mostly Mexican fast food with sales of US$7.55 billion. That of Wendy's, in comparison, is "only" US$1.9 billion with a much lower equity ratio, etc. (cf. (17), (18), (20)).
Where is the connection?
Although Chipotle is the larger corporation with much more sales and name recognition in the U.S., there is an interesting tie between Chipotle and Wendy's that only reveals itself at second glance. A first sign can actually be found on Facebook in the form of the Wendy's Aruba store. The latter posted the group's new sandwich on April 21, 2021 as part of a campaign (see (18)).
So what?
It's called: "Chipotle Crunch Sandwich" with the original name Chipotles.
Have you been traveling on the wrong side? How does that fit together? Are Wendy's and Chipotle now one?
No - Chipotle used to be 92% owned by McDonald's (no kidding) - but since McDonald's IPO, it is no longer part of McDonald's and is currently owned by institutional investors (see (19)). Wendy's belongs to "The Wendy's Company" and is therefore part of a holding company. Consequently, the companies are not directly dependent on each other. Rather via general market participation and such actions.
Why does Chipotle go along with something like this?
Wendy's is, to put it bluntly, on about the same level as a good, fresh burger joint that many of us will know from downtown. You go there, get a fresh burger grilled and assembled before your eyes, can make requests, and usually get what you order. HUST HUST.
Chipotle has similarly wickedly gone one step further, pursuing the concept of "I'm an academic in a suit, only have a 30 minute break, but am too fine to go to the chip shops."
So that we get a somewhat equal understanding of Chipotle and I can consciously show you a standard branch without much luxury around it, I will briefly introduce you to the branch in Germany of Frankfurt am Main.
I deliberately did not make the choice of this branch in Germany easy and spent a lot of time on the selection. Many other German branches were interesting and....
No they weren't.
In all of Germany, Chipotle via (23), (24) states that they would only operate one branch in Frankfurt am Main in Hesse. Nevertheless, my choice fell on this branch, because it shows very well what Chipotle is able to do even with a small branch size, different food culture and relatively competitive area (other pictures also show KFC nearby, among others).
The stores are very open in design, floor-to-ceiling windows allow a view from the outside all the way to the back kitchen, the lighting is pleasantly dimmed, and there seems to be plenty of seating. There doesn't seem to be any real standing room or the typical screens for ordering with extra techno beats from the fryers and equipment.
If you check the reviews, you end up with our German audience at just under 4 out of 5 stars with 240 reviews. This is not to sing the praises of this store.
What does that mean?
Chipotle obviously knows how to convince a more upscale audience of tacos, burritos and various bowls with this branch. In principle, it follows the same path as the above-mentioned interpretation on my part about the image of the store, the equipment and the existing image.
Chipotle targets areas with more offices, through traffic via office workers, and a more open image
It tends not to see itself in closer competition with "typical" fast food restaurants like McDonald's and Burger King
The products seem to be well received by the clientele
The products seem to require less "positive marketing"
The products are largely unrivaled in the wider competition from McDonald's and co.
So why are they so bananas and give a part of their products to Wendy's of all places?
From my point of view, there are two reasons for this, which I would like to explicitly mark as my analysis at this point. First, office workers in home offices tend not to stop by the restaurant around the corner from the workplace :) Secondly, Chipotle's self-image as presented by the company, journalists and me does not result in a competitive situation, but rather in the development of new customer segments.
I write it now times unacademically and platitudinously: If I would live exemplarily near a Wendy's in El Paso, but always to the presence to the Chipotle go during the lunch break, the action offers me the possibility to fall back on used and to stand there if necessary with me not pleasing food.
This is no confused theory of me, but there are already first voices, which rot this effect reversed at Wendy's. If we consult the report from (24), connect it with the said to the topic branch spreading of Wendy's and the image, then the action Wendy's makes absolutely sense (see (24)).
Wendy's, as I hope I have shown, is also very well known in the sandwich sector, competing with Subway, among others. A very special one is the Premium Cod Filet Sandwich.
I don't play Call of Duty.
Okay sorry for the flat joke. Nevertheless, this sandwich represents a first. It consists of a cod from the North Pacific, a fresh burger bun, dill pickles, dill tartar sauce and a lettuce leaf (see (25)).
I can get that at the Hamburg fish market, too. So what?
This sandwich is part of the so-called fast food upscaling. In other words, it is a product that, to put it bluntly, is too classy/expensive/rarely in demand or would probably be completely out of step with customer preferences. In addition, existing supply chains may not be designed for this product and the procurement volumes may result in higher prices that have to be passed on to the customers. It is generally thus from the start already price-disadvantaged and must supply in form of sales figures now (see (24), (25)).
We can therefore understand that Wendy's is deliberately seeking proximity to Chipotle, because it does not want to remain in this quasi intermediate stage between "Hey, somebody fix the ice cream machine" and "You can't get in here with sweatpants" and wants to diversify. So to speak, with well-known names of prominent representatives, who have already achieved this, as well as own products. The own product is e.g. this cod sandwich and the quasi "secured" brand product of the Chipotle Crunch Sandwich (cf. ibid.).
The necessity of this dual approach refers to, among other things, the lack of confidence of customers that a fast food restaurant can stand out with upscale standards, but ultimately remains just that. To break with this image, more products are needed. But for the customer to come at all, he must have a familiar brand. What in the general restaurant is the Pizza Margarita or the Wiener Schnitzel as a solution for externals, at Wendy's is now this "Chipotle-approved" product of the burger. Absolutely understandable and, in my opinion, also a strategically very sensible implementation (cf. ibid.). Measured against the above-mentioned statements about the branch network, Wendy's will experience white and black here from my point of view, since the existing branch network is based on population density and not on reaching a special target group such as people in suits, high-income earners, vegans or any other target audience.
How will the new products be received and will this possibly secure Wendy's a new target group?
To answer this question, I was worried that trustworthy reviews would not be found so quickly or would be too blinded by marketing techniques. In fact, the Internet jumped on this new product category of what I will now call Neo products amazingly quickly and comprehensively.
I looked at articles on this category and found (25) in particular interesting. Also here the fear is taken up, there a regional player tries itself at the national league and would deliver as a consequence a dry and/or boring sandwich (see (25)). In fact, the fish, the sauce and the overall package were very well received. If you want to save on your next Wendy's purchase, use my coupon and ...
No - of course this is not meant to be an advertisement for Wendy's or anyone. I just have to say that I personally find the strategy of Wendy's and the reactions to it amazingly positive. One of the criticisms, however, was that the Cod Filet Sandwich relied too much on the fish and therefore didn't have much to offer in terms of greatness other than fish plus sauce. I have consulted other reviews and apparently this non-representative impression of various men and women makes a good mood for the Neo products (see also (25)).
What does this mean for me as a Wendy's shareholder?
I can only express my opinion, but in consequence the development for Wendy's shows that there seems to be a lot of potential here and further customer bases can be won. The feedback on the neo-products from the fast food upscaling are very positive from my point of view and complain at most about the size, which could possibly be due to the supply chain price effect mentioned above.
I hope you have enjoyed my contribution so far and that you have been able to follow my thoughts.
If you like such posts better than "What is your favorite stock?", I am happy about every new subscriber. In the medium term, my goal is to create a functioning community, not only of dividend investors, that tolerates the interplay of different opinions and regularly provides me with inspiration for new posts and videos.
Do you want a separate analysis also on Burger King (Restaurant Brands International)? In the future, I will also podcast once my voice no longer sounds like Nate Dogg two octaves lower.
Now back to the topic. Of course, most of you are now wondering how I rate the stock.
2. analysis of the Wendy's share - the better McDonald's?
Wendy's stock, with its 2.2 percent dividend yield, is a candidate for the defensive portion of my dividend portfolio. As many of you may have read in my self-analysis, I don't use government bonds, gold or anything else for the "stable" core of my dividend portfolio, but use boring "everyday" stocks with high utility, good standing and relatively safe dividends (see (26), (27), (28)). The price I pay for this is a presumably lower total return in the medium to long term compared with investment strategies and a possibly somewhat lower dividend yield. I don't care about that for the reasons described in my other post - it's about stability and cash flow inflow even in bad times. Those who have followed the diving of various tech stocks will know that I have set up this stable core for myself. My tech portfolio should not be of interest here for the time being
What does Wendy's offer me?
With a dividend yield of 2.2%, Wendy's offers a relatively average dividend for this sector. McDonald's is currently even lower at 2.06% (see (26), (27)). The ex-dividend day is 30.11., so that hypothetically one could still take the dividend (cf. ibid.).
With the statements made about upscaling its fast food products, can Wendy's make a significant difference and possibly achieve higher sales and grow stronger? This question drives me around when looking at the fundamentals.
Revenue is $2.076 billion in 2022 and is expected to grow by $0.1 billion. The market value is circa $4.8 billion, just under a tenth of Chipotle's $42 billion, showing that we are talking about a relatively small to mid-sized player in the fast food industry that has nevertheless been around for quite some time (see (26)). It seems problematic to me that the market value of Wendy's has been in a sideways channel from USD 4.7 billion to USD 5.26 billion over the last 4 years and the enterprise value has artificially inflated due to the Corona Effect - This is especially shown by looking at the P/E ratio, which reached 42.2, the highest level in 2020 in the entire annual direction from 2019 to 2024. Otherwise, the P/E ratio is expected to be 26.8 in the future and to fall to 20 times the share price in the context of rising enterprise value. Of course, these figures assume that a Corona effect does not occur again, which leads to a flight into these asset classes and in particular dividend battleships (cf. ibid.).
Let's now look at dividend yields over the period 2019 to 2024. Surprisingly, we find that the dividend yield also shows the Corona effect. While dividend yields were still at 1.88% around 2019, this parameter fell to 1.32% in 2020. Thus a reduction of 29.8% circa. This could now be interpreted as a typical procedure of companies that have increased their share price, but logically have not raised the dividend in the same proportion (ibid., (28)).
Is this really the case?
A look at the numbers tells us: no. Because Wendy's actually lowered its dividend from 42 USD cents (2019) to 29 USD cents in the Corona year 2020, and then paid out 43 USD cents again in 2021. Wendy's is expected to maintain this course, with future dividends at 49 - or 63 USD cents in 2024. Analysts believe that Wendy's will be able to achieve these dividend increases, as earnings per share as a ratio of net income by the number of shares traded are expected to more than double from 52 USD cents in 2020 to 1.12 USD cents (see ibid.).
What happened to the share price level in 2020 and what does that tell us about the resilience of the stock?
Essentially, not much has happened. Wendy's stock has fallen from $22.3 to $21.9. That's essentially not much - so the Marketscreener reference price doesn't help us with the question of whether Wendy's is stable enough for my dividend core (see (26)).
What helps with now?
I like to use comparisons to the industry, main competitors in detail, sector ETFs or also the so-called 52 weeks beta (see (29)).
I am totally alpha and do not talk to betas.
...
The 52 week beta tells us how much the chosen financial product (in this case, Wendy's stock) fluctuates compared to the overall market.
It helps me to see if the stock / ETF is fluctuating the overall market's
- Mimics (BETA = 1)
- Limited (BETA < 1)
- Intensified (BETA > 1)
This is basically very important, as 52 weeks of evaluated data series at least give an overview.
Why is it not an ultimate factor for stock evaluation?
Basically, because only one year is referred to, the factor cannot tell you "The company has had a stupid time, don't pay any attention to me" and it cannot indicate future developments either. So in the sense of e.g. the above-mentioned upscaling, which also eats up resources and can possibly, as described, eat away at the substance of the company (cf. ibid.).
What does the 52-week beta say about Wendy's?
The 52 week beta of Wendy's is in the positive with an average change of 5.56% and the beta over the 5 year period is 0.9. From the above we now know that the 0.9 limits the oscillation of the market. It is therefore a market participant that oscillates less strongly and thus shows less volatility (see (29),(30)). If we hold the 52-week beta of the S&P 500 in percentage form against it, we see a negative 13.51% ratio. Thus, the S&P 500 has been negative 13.51% over the same period. So, to put it wickedly, Wendy's has outperformed the market here. This tends to be a good sign (see (30)).
So basically, Wendy's seems to be stable in bad times and fluctuate less than the market. But what about the typical disadvantage of the industry, that fast food chains are expensive right now and may not be able to grow much?
To this end, I first look at the expected sales of Wendy's and quickly notice that from 2022, sales are expected to grow strongly from $1.897 billion to $2.076 billion in 2022. In 2023 and 2024, the sales increases of about $0.1 billion show moderate growth and the sales returns remain stable in the 17% to 18.5% channel (see (26), (28)). This means that Wendy's generates more profit with the more sales. 1 million in sales brings you precious little if 0% return on sales is generated with it. For me, it is always a question of whether the growth really "arrives".
What about the P/E ratio?
The P/E ratio of Wendy's is certainly not among the cheapest as shown. The current P/E ratio of the S&P 500 is around 21, which is cheaper than the Wendy's stock at 26.8. However, we should not forget that we are paying for a stable dividend anchor here, so I am again making the comparison to the already expensive industry here (see (26), (31)).
In the sector comparison to McDonald's, Chipotle and YUM Brands, we are greeted by a glorious red in all lines of the P/E ratio even without looking at the chart. So we see that not only Wendy's is apparently expensive, but also competitors selected by the market screener (see (31)).
Looking at the 1-year performance, Wendy's has been performing relatively stable according to the 52-week beta with the exception of a sharp drop in May 2022 and has been in an uptrend since then. Up to that point, Wendy's even outperformed McDonald's during this period, but has been in a very similar chart trend since then, reaching third place in the peer comparison. Even Chipotle as the represented giant in Mexican food shows a worse performance with -11% circa compared to Wendy's with +2%. Mcdonalds is up by around 6% and is only outperformed by Restaurant Brands International Inc. (see (31), (32)).
What does this mean so far?
We can see that the current crisis-ridden year has not left this "stable" sector unscathed and has ultimately affected Wendy's as well. Nevertheless, the result of +2% can be considered positive in a sector comparison and, in my opinion, underpins that the share is definitely stable in character (see (31), (32), (33)).
Would I have done better with an investment in VOO?
It is difficult to judge this in general. For me, I can only say: Wendy's clearly beat the S&P 500 year-on-year according to (32) and (33). We compare -14.3% to +2.37%, although comparing ETF to individual stock in this constellation is not really fair - an S&P 500 tends to fluctuate more, which is made tangible by the S&P 500's VIX score, among other things. Moreover, we compare a defensive stock with a plethora of tens of sectors and companies (see (32), (33)).
2. my opinion on Wendy's
Wendy's is a fast food company with a different purpose than McDonald's and is making a sustained push into the environment of higher-end gastropubs like Chipotle. Its products to date also seem to be well received by existing customers, and the stock has fallen to an acceptable if still relatively expensive level after a period of high valuation. In the crisis period, Wendy's was able to show that with only 90% fluctuation of the overall market and a positive performance as shown, its stability and, in my view, somewhat high valuation can be justified to some extent (see 1.1, 1.2).
What I don't like, I already hinted at in the first part of this analysis. If you are trying to build up new regular customers and be accepted by them, you also have to be on site in the appropriate facilities of office buildings and skyscrapers. Otherwise, you won't be seen and you'll be selling premium products without a target group in direct proximity to you. In principle, Wendy's is doing many things right here, but everyone must be aware that this group is undergoing a transformation to a new business model. With the best will in the world, I can't imagine that, if successful, main competitors will continue to run promotions with Wendy's. A simple look at Chipotle's chart is enough to show that something is probably not quite right here. After all, the share has lost -11.66%, while its (still) distant competitor Wendy's is down 2.36% (see (33)).
To conclude this analysis, I would like to state that Wendy's remains quite interesting for me and I will add the stock to my watchlist. Personally, I find the placement as "Yes at our place you can eat fast, but it's also fresh" and "But you don't have to reserve a seat and you can also come in quickly after work" quite exciting. The food culture of many office workers suffers due to everyday stress and I realize that you should take time for this "break" from everyday life. Unfortunately, everyone knows that in larger city centers this principle of rest is factually impossible to implement. With this in mind, I also really liked the Chipotles store design - I think many people who don't work 100% home office will appreciate this darkened and already quite nice ambience and maybe spend more than one euro for the cheeseburger.
I hope you enjoyed my post! I found the analysis of Wendy's very exciting and was able to learn a lot about the US-American food culture in transition and am glad that there is definitely movement in the industry.
Chipotle will be my next analysis. If you don't want to miss it, I am happy about every constructive subscriber. My medium-term goal is to reach 750 subscribers on Getquin and 200 subscribers on YouTube, possibly before the end of the year. With this I would also have reached the goal of one of my subscribers that the one also gave me when I asked about setting up a YouTube channel. Yes you are meant :)
As promised, I'm putting my Intel video in for you. I plan to focus my next video series on dividend analysis. Again, I'm happy to get feedback.
Did you like the analysis? What do you think about Wendy's?
Have you ever been there and can you confirm what I'm saying here from a distance based on facts, figures and data regarding the transformation to a higher standard of Wendy's stores? I'm really interested in that. Of course you can also write me your favorite share, if you must:)
Your Bass-T
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Sources
(1) https://www.lorenz-leserservice.de/img/produktbilder/l/wendy-abo.jpg?1570614618
(2) https://pferdeklinik-kleintierpraxis.de/pferderassen/boerpferd.html
(3) https://www.wendys.com/en-uk/wendys-story
(4) https://eu.azcentral.com/story/travel/arizona/2016/08/29/mcdonalds-first-drive-through-sierra-vista-arizona/88009974/
(5) https://www.mcdonalds.com/de/de-de/ueber-uns/geschichte.html
(6) https://www.wendys.com/en-uk/menu/our-menu
(7) https://www.wendys.com/en-uk/menu-categories/breakfast-combos
(8) https://thefoodxp.com/wendys-breakfast-menu-prices/
(9) https://imgur.com/EH0gPdw
(10) https://de.statista.com/statistik/daten/studie/785485/umfrage/laender-mit-den-meisten-mcdonald-s-restaurants-weltweit/
(11) https://www.scrapehero.com/location-reports/Wendys-USA/
(12) http://www.pdwb.de/di_usa-d.htm
(13) https://www.wikiwand.com/de/Texas#Media/Datei:Texas_population_map.png
(14) https://www.merkur.de/politik/texas-gruendung-geschichte-geografie-staedte-bevoelkerung-wirtschaft-wahlen-90068482.html
(15) https://www.usa-info.net/wp-content/uploads/texas-karte.png
(16) https://locations.chipotle.com/tx
(17) https://www.boerse.de/fundamental-analyse/Chipotle-Mexican-Grill-Aktie/US1696561059
(18) https://m.facebook.com/WendysAruba/photos/a.521050604648378/3972713602815377/?type=3&source=57&refid=52&__tn__=EH-R
(19) https://www.boerse.de/fundamental-analyse/The-Wendy-s-Company-Aktie/US95058W1009
(20) https://www.best-practice-business.de/blog/geschaeftsidee/2013/06/10/chipotle-mexican-grill-kommt-nach-deutschland/
(21) https://hmn.wiki/de/The_Wendy%27s_Company
(22) https://www.chipotle.de/find-a-chipotle
(23) https://www.tripadvisor.de/ShowUserReviews-g187337-d5501366-r428637671-Chipotle_Skyline_Plaza-Frankfurt_Hesse.html#photos;aggregationId=&albumid=&filter=
(24) https://www.businessinsider.com/wendys-is-copying-chipotles-strategy-2014-5
(25) https://fastfoodgeek.com/fish/wendys-premium-cod-fillet-sandwich-review/
(26) https://de.marketscreener.com/kurs/aktie/THE-WENDY-S-COMPANY-9691436/
(27) https://aktienfinder.net/dividenden-profil/McDonald's-Dividende
(28) https://aktienfinder.net/dividenden-profil/The%20Wendy's%20Company-Dividende
(29) https://www.deltavalue.de/betafaktor/
(30) https://finance.yahoo.com/quote/WEN/key-statistics/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFI1xUrAH8rJWn_f7rBKsVPV4K9b6JiGQxaaH3j6C3ipHOfGC5s61XS_pxX7ssbDqRHJs_NFKIypE9F43lR5KL0IP3cHdyx4imz0eEZiMbjeAMUy31Gq62A6UuXINAYVtqfDqpDN68KJSapTz2cV72mBG6TxwlXJQJruUa6f9tMw
(31) https://www.boerse.de/kgvs/KGV-SundP-500
(32) https://de.marketscreener.com/kurs/aktie/THE-WENDY-S-COMPANY-9691436/charts-sector/
(33) https://de.marketscreener.com/kurs/aktie/THE-WENDY-S-COMPANY-9691436/charts-comparison/
