Wendy's Gears Up for Q4 Earnings: Weak Traffic & U.S. Trends in Focus

The Wendy's Company WEN is scheduled to report fourth-quarter 2025 results on Feb. 13, before the opening bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 20%.

WEN’s Q4 Estimates

The Zacks Consensus Estimate for earnings is pegged at 16 cents per share, indicating a decline of 36% from a year ago.

The consensus mark for revenues is pegged at $547 million, implying a decrease of 4.8% from the year-ago quarter.

Factors to Note Ahead of WEN’s Q4 Results

Wendy’s U.S. business remains the primary drag and is likely to have pressured fourth-quarter top-line performance despite a few encouraging developments. Traffic softness has been the core issue, reflecting ongoing consumer strain, particularly among lower-income customers, and intense competition in the QSR burger category. While value offerings such as the $5 Biggie Bag and the $8 meal deal generated engagement, management indicated that some promotions were more effective at driving repeat visits from existing customers than attracting new ones, limiting incremental traffic. In addition, the company deliberately reduced promotional complexity and pushed certain initiatives into 2026 to focus on execution and brand rebuilding, which may have constrained near-term sales catalysts in fourth-quarter 2025.

Another headwind stems from the system optimization initiative under Project Fresh. The review and potential closure of a mid-single-digit percentage of underperforming U.S. restaurants, while beneficial for long-term average unit volume and profitability, could weigh on system-wide sales growth in the near term. The strategic shift away from prioritizing U.S. net unit growth toward improving AUVs also reduces incremental revenue contribution from new stores. Breakfast continues to underperform relative to other dayparts amid industry-wide softness, further limiting domestic sales momentum. 

Our model predicts total U.S. systemwide same-restaurant sales and International systemwide same-restaurant sales decrease of 4.9% and increase of 0.9%, respectively, from the prior-year levels.

On the bottom line, continued cost pressures are likely to have weighed on profitability. Commodity inflation, particularly elevated beef prices, along with ongoing labor inflation, is affecting restaurant margins. While the company is maintaining disciplined pricing and benefiting from productivity gains tied to improved training and technology, declining traffic creates negative operating leverage. Margin contraction at U.S. company-operated restaurants, combined with persistent input cost inflation, could have hurt fourth-quarter earnings despite tight control over G&A and lower capital spending.

What Does the Zacks Model Unveil for WEN?

Our proven model doesn’t predict an earnings beat for Wendy’s this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: WEN has an Earnings ESP of +13.93%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: WEN currently has a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat on Earnings

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

Restaurant Brands International Inc. QSR has an Earnings ESP of +0.27% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the to-be-reported quarter, Restaurant Brands’ earnings are expected to register a 14.8% year-over-year increase. QSR’s earnings surpassed estimates in two of the trailing four quarters and missed twice, with an average miss of 0.4%.

The Cheesecake Factory Incorporated CAKE currently has an Earnings ESP of +0.10% and a Zacks Rank of 3.

In the to-be-reported quarter, Cheesecake Factory’s earnings are expected to decline 5.8% year over year. CAKE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.7%.

Domino's Pizza, Inc. DPZ currently has an Earnings ESP of +2.88% and a Zacks Rank of 3.

In the to-be-reported quarter, Domino's earnings are expected to register a 9.6% year-over-year rise. Domino's earnings surpassed estimates in two of the trailing four quarters and missed twice, with an average beat of 1.1%.

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

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