Wendy’s/Arby’s Group, Inc. (WEN), the third largest fast-food restaurant operator, notified that its Board of Directors recently raised the share buyback authorization by $50 million to $250 million, which will remain in effect through January 2, 2011.
 
Since the announcement of the share repurchase program in August 2009 and till March 19, 2010, the Wendy’s/Arby’s has bought back 30.4 million shares at a price of $4.64 each, aggregating approximately $141 million. The company has $109 million remaining under the authorization. The company has nearly 444 million shares outstanding.
 
Wendy’s/Arby’s has reported better-than-expected results in the most recent quarter. The fourth-quarter 2009 earnings of 7 cents a share surpassed the Zacks Consensus Estimate of 3 cents, and rose 40% from 5 cents delivered in the prior-year quarter. Total revenue grew marginally by 0.5% year-over-year to $900.9 million.
 
Company-operated restaurant margin in the recent quarter expanded 420 basis points to 15.9% at Wendy’s brand, but contracted 40 basis points to 14.2% at Arby’s brand.
 
Wendy’s/Arby’s has outlined a multi-year turnaround plan to improve restaurant operating margins, reinvigorate brands, revitalize comparable-store sales and expand internationally.
 
While Wendy’s is showing improving trends, Arby’s still continues to face headwinds with sagging comps, waning traffic and falling margins. We see limited upside potential in the stock until an improvement in Arby’s performance is visible.
 
Wendy’s/Arby’s Group currently operates more than 10,000 restaurants in the United States and 24 countries and U.S. territories worldwide.
 
 
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