Nathan Hamilton

Wendy's Turnaround Reaching An Inflection Point

Overview

The Wendy's (NYSE:WEN) thesis warrants revisiting after prices have increased through 2013. Although shares have returned 78% YTD, I believe WEN is still an early innings play on a fast-food turnaround and significant upside remains with shares trading at 62% of the peer QSR category. I estimate shares have 58% upside through 2014 (3.4x risk-reward) as WEN executes a tried and true industry strategy that is beginning to gain traction.

Investment Drivers

Positive share momentum is likely to continue as three potential factors align valuations with competitors:

1) An initial bulk remodeling of 150 company owned stores will come online through the end of 2013, thus reaching operational capacity into 2014 and providing investors/franchisees with proof of...

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