Wendy's Gears Up for Q2 Earnings: Here's What You Must Know

The Wendy's Company WEN is scheduled to report second-quarter 2025 results on Aug. 8, before the opening bell. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate.

WEN’s Q2 Estimates

The Zacks Consensus Estimate for earnings is currently pegged at 25 cents per share, indicating a 7.4% decrease from the year-ago level.

The consensus mark for revenues is pegged at $555.5 million, implying a decline of 2.7% from the year-ago quarter's figure.

Factors to Note Ahead of WEN’s Q2 Results

The company’s second-quarter 2025 top line is likely to have been hurt by soft consumer demand and dismal traffic. The soft consumer demand seen in March appears to have carried into the quarter under review, particularly among lower-income households, which pulled back spending in high single to low double digits. Given Wendy’s exposure to this demographic, ongoing financial strain is expected to weigh on traffic and sales volumes.

Quick-service restaurant traffic trends remained below expectations, with industry data showing mid-single-digit declines in the first quarter and no signs of a rebound in early second-quarter 2025. This ongoing softness in industry-wide foot traffic, especially in breakfast, is likely to limit Wendy’s ability to drive meaningful top-line growth.

The Wendy's Company Price and EPS Surprise

The Wendy's Company price-eps-surprise | The Wendy's Company Quote

However, both creativity and value are required to adapt to the present situation. The company’s menu innovation reflects shifting consumer tastes and produces experiences through partnerships that capitalize on customer passion points. Although it launched several new initiatives, such as the “100 Days of Summer” campaign and new Frosty collaborations, these programs only began to roll out late in the quarter. As such, their full traffic-driving potential may not be realized until later in the year, providing limited offset to second-quarter headwinds.

Our model predicts total Wendy's U.S. sales to decline 4.6% in second-quarter 2025, whereas Wendy's International is likely to increase 9.3% year over year.

Margins

During the quarter to be reported, the bottom line is expected to have declined year over year due to commodity inflation pressure, and the uncertain macro environment is likely to have a negative effect. For the second quarter, our model expects total costs and expenses to decrease year over year by 1.5% to $464.2 million.

For the quarter to be reported, our model predicts Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) to decline year over year by 2.4% to $139.7 million and Adjusted EBITDA margin to increase by 10 basis points (bps) year over year to 25.2%.

These changes were due to increased commodity costs, pay rate inflation, and sales deleveraging and were partially offset by higher labor productivity.

What Does the Zacks Model Unveil for WEN?

Our proven model does not conclusively predict an earnings beat for Wendy’s this time around. The company does not have the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), to increase the odds of an earnings beat.

WEN’s Earnings ESP: WEN has an Earnings ESP of -0.10%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

WEN’s Zacks Rank: WEN currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combinations

Here are a few other stocks from the Zacks Retail-Wholesale sector, which, according to our model, also have the right combination of elements to post an earnings beat this reporting cycle.

Dillard's DDS has an Earnings ESP of +23.90% and a Zacks Rank of 1 at present. 

DDS is expected to register a 17.43% decrease in earnings for the to-be-reported quarter. It reported an earnings beat in three of the trailing four quarters, missing on one occasion, delivering an average surprise of 12.7%.

Bath & Body Works, Inc. BBWI currently has an Earnings ESP of +5.07% and a Zacks Rank of 2.

BBWI reported an earnings beat in each of the trailing four quarters, delivering an average surprise of 4.74%. Its earnings for the to-be-reported quarter are expected to decrease 2.7%.

Abercrombie & Fitch ANF has an Earnings ESP of +2.97% and a Zacks Rank of 3 at present.

ANF is expected to register a 9.6% decrease in earnings for the to-be-reported quarter. It reported an earnings beat in each of the trailing four quarters, delivering an average surprise of 11.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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