BMO Capital Markets lowered its price objective on Wendy’s Co. to $9.00 from $11.00 while retaining a Market Perform rating. The move comes as the burger chain contends with weakening sales trends, margin compression and a guidance update that fell short of street expectations. According to InvestingPro data, Wendy’s stock is trading around $6.84, down 44.5% over the past 12 months and trading near a 52-week low of $7.08.
Wendy’s reported fourth-quarter 2025 adjusted EBITDA of $113 million, narrowly outpacing the $112 million consensus. The company said favorable general and administrative expenses and rental income helped offset softer global comparable sales. On a trailing 12-month basis, Wendy’s total EBITDA stood at $506.6 million.
Operationally, U.S. comparable sales fell 11.3% in the quarter, a decline the company attributed to difficult year-over-year comparisons and a materially lower marketing cadence. Restaurant-level margins contracted by 380 basis points, reflecting the sales pressure at the unit level. Over the past year, Wendy’s revenue declined by 3.1%.
Management described October as the trough for comparable sales, noting improvement to negative 8% in January before recent weather disruptions. The company issued 2026 guidance that was well below consensus and provided further details on its Project Fresh turnaround plan. BMO characterized Project Fresh as sensible in design but warned that execution risk is meaningful and the operating environment remains challenging.
Wendy’s continues to return capital to shareholders via a substantial dividend yield; InvestingPro data shows a 7.5% dividend yield and the company has paid dividends for 24 consecutive years. At the same time, InvestingPro indicates the stock is trading slightly below its Fair Value and that 15 analysts have recently revised earnings expectations downward.
In supplemental disclosures tied to the quarter, Wendy’s reported adjusted earnings per share of $0.16 versus an analyst consensus of $0.15. Revenue for the quarter came in at $543 million, slightly exceeding the $537.55 million projection. Despite beating on the headline numbers, fiscal 2026 guidance was reduced, with company commentary pointing to higher general and administrative expenses and increased interest costs as drivers of the shortfall relative to consensus.
Same-store sales were weak across geographies in the fourth quarter, with global comparable sales declining 10.1%. U.S. locations led the deterioration with an 11.3% drop, while international comparables declined 2.0%.
Following the results and outlook, several brokerages adjusted their valuations. RBC Capital and Bernstein SocGen trimmed their price targets to $8.00 and $9.00, respectively, while keeping their existing ratings. KeyBanc reiterated a Sector Weight stance, referencing the soft sales outlook. Analysts and management flagged strategic and market concerns during the earnings call that underpin the more cautious near-term view.
Context for investors
The revisions by BMO and others reflect a blend of modest near-term operational beats and broader momentum challenges, including a sales slump, margin contraction at the restaurant level and guidance that does not meet consensus assumptions. These factors have pressured the share price and prompted downward adjustments to earnings expectations.