Goldman Encourages Investors to Take Advantage and Reduce Long Positions on Wendys-Arbys Group (WEN)
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Price: $6.08 +1.33%
Rating Summary:
2 Buy, 7 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Rating Summary:
2 Buy, 7 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Trade WEN Now!
Goldman Sachs is reiterating its Sell rating on shares of Wendy's-Arby's Group (NYSE: WEN), while telling investors to take advantage of any sustained strength and liquidity in the shares by reducing long positions.
The company announced Monday morning, before the open of the market, that it has found a buyer for 81.5 percent stake in Arby's. Shares of WEN are currently trading up 7.7 percent from when they closed last Friday, June 10, 2011.
Roark Capital is the company that agreed to purchase the 81.5 percent share of Arby's. WEN will see a total economic value of $400 million from the deal, purchase price of $320 million and another $80 million from cash tax shield spread over several years.
WEN reaffirmed its 2011 EBITDA guidance of $330-$340 million, but did state that it plans to use $210 million from the transaction to buyback shares over the next few years.
Now that Arby's is not an issue investors will be focusing on Wendy's specifically, which has not seen more than 1 percent same-store-sales since 2004. The firm reports WEN's new product launches do not appear to be moving the needle, as new product sales are simply cannibalizing the base. With rising food prices placing pressure on margins and the company's plan to take pricing not working, things do not look so sustainable for the company.
For more ratings news on Wendy\'s-Arby\'s Group click here and for the rating history of Wendy\'s-Arby\'s Group click here.
Shares of Wendy\'s-Arby\'s Group closed at $4.56 yesterday, with a 52 week range of $3.83-$5.22.
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The company announced Monday morning, before the open of the market, that it has found a buyer for 81.5 percent stake in Arby's. Shares of WEN are currently trading up 7.7 percent from when they closed last Friday, June 10, 2011.
Roark Capital is the company that agreed to purchase the 81.5 percent share of Arby's. WEN will see a total economic value of $400 million from the deal, purchase price of $320 million and another $80 million from cash tax shield spread over several years.
WEN reaffirmed its 2011 EBITDA guidance of $330-$340 million, but did state that it plans to use $210 million from the transaction to buyback shares over the next few years.
Now that Arby's is not an issue investors will be focusing on Wendy's specifically, which has not seen more than 1 percent same-store-sales since 2004. The firm reports WEN's new product launches do not appear to be moving the needle, as new product sales are simply cannibalizing the base. With rising food prices placing pressure on margins and the company's plan to take pricing not working, things do not look so sustainable for the company.
For more ratings news on Wendy\'s-Arby\'s Group click here and for the rating history of Wendy\'s-Arby\'s Group click here.
Shares of Wendy\'s-Arby\'s Group closed at $4.56 yesterday, with a 52 week range of $3.83-$5.22.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
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