DrStockPick.com Stock Report!

Tuesday August 18, 2009

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Arby’s Restaurant Group, Inc., a subsidiary of Wendy’s/Arby’s Group, Inc. (NYSE: WEN), announced today that it has signed agreements in the first half of 2009 with 11 new and seven existing franchisees for the development of 47 new Arby’s restaurants in the U.S. and Canada.

Electric Transmission America (ETA), a transmission joint venture of American Electric Power (NYSE: AEP) and MidAmerican Energy Holdings Company, has joined with American Transmission Company, Exelon Corporation (NYSE: EXC), NorthWestern Energy (NYSE: NWE) and MidAmerican Energy Company, a subsidiary of MidAmerican Energy Holdings Company, to sponsor a comprehensive study of the transmission needed in the Upper Midwest to support

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Wendy's Adapts with Value Offerings, Arby's Lags Lean TimesThe sinking economy necessitates that restaurants adapt to survive. First quarter financial results at Wendy's/Arby's Group Inc. (WEN) indicate Wendy's is adapting well to the lean times, attracting cash-squeezed consumers with a "Value Trio" of 99-cent sandwiches, while Arby's $5.95 bundling value packages is driving them to cheaper fare at McDonald's (MCD), Taco Bell -- a Yum Brands Inc. (YUM) concept, and Jack in the Box Inc. (JACK).Wendy's/Arby's Group, formed in September through the merger of Arby's parent, Triarc, and Wendy's, reported that 1Q09 system-wide same-store sales at its Wendy's fast-food hamburger chain rose 1.0%, but fell 8.7% at the pricier Arby's roast beef take-out chain. Wendy's comps would have been stronger, but 300 of its units stopped serving breakfast.Excluding one-time charges, 1Q09 EPS was $0.01, missing our estimate of $0.04 ...

It is the best of times and worst of times for Wendy's/Arby's (WEN). Fourth quarter financial results indicate the sinking economy is driving value-seeking consumers to Wendy's and away from Arby's. Wendy's/Arby's, formed in September through the merger of Arby's parent, Triarc, and Wendy's, reported that 4Q08 same-store sales at its Wendy's fast-food hamburger chain rose 3.7%, but fell 8.5% at the pricier Arby's roast beef take-out chain.Excluding one-time charges, 4Q08 EPS was $0.05. Massive impairment charges at Arby's and other non-recurring charges totaling $0.89 per share after-tax pushed EPS to a loss of $0.84 for 4Q08.Adjusted EBITDA grew 30% year-over-year to $74 million, and EBITDA margin expanded by 270 basis points to 12.3% from 9.6% in 4Q07, as management began to wring G&A overlap from the system post-merger and squeeze labor savings at Wendy's through a new scheduling system.Management expects positive ...

Nelson Peltz, Chairman of Triarc (TRY), the franchisor of Arby’s restaurant chain, was able to strike a buyout deal with Wendy’s (WEN). Under the merger agreement, expected to close in the second half of the year, WEN shareholders will receive 4.25 shares of Triarc for each share of Wendy’s they own. This equates to $25.29 per share at Triarc A shares’ current price ($5.95).

Wendy’s incoming management team, led by Arby’s CEO, have outlined what we think is a viable, albeit multi-year turnaround plan that includes improving margins, reinvigorating the brand, revitalizing comps, and expanding internationally. However, Wendy’s turnaround efforts come at a difficult time for the industry, which faces rising input costs and consumer spending pressures.

While we think there is a lot of low-hanging fruit for initial margin improvement, the management’s 500 basis point target will in our opinion take at least two years and necessitate

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I have begun a new series of posts at RealMoney focusing on Wallflowers – stocks that have limited analyst coverage. By identifying stocks that fall below Wall Street’s radar screen the hope is to find some undervalued gems.

It may seem odd, on the heels of its deal to acquire Wendy’s (WEN) , to classify Triarc (TRY) as a wallflower. Certainly it has not shied away from publicity of late. However, in market terms, a wallflower is an under-covered stock, and with just one analyst currently covering the name, Triarc certainly qualifies.

I think the acquisition will do several things for Triarc:

Raise its profile
Bring some of the 8 analysts covering Wendy’s on board
Reduce the overhang of Nelson Peltz’s virtual controlling interest
Simplify the ownership structure
Improve the capital structure

As to valuation, with the restructuring and other deal-related anomalies, estimating earnings is likely to be something of a …