Wendy's/Arby's (WEN) Higher On Renewed Rumors and Bullish Analyst Comments

Shares of Wendy's/Arby's Group, Inc. (NYSE: WEN) are on the move today on renewed takeover speculation and positive comments from analysts at Deutsche Bank.

Since the takeover of Burger King (NYSE: BKC) by private equity in early September, takeover talk has swirled around Wendy's. Shares are up about 20% since the deal.

In a report this morning, Deutsche Bank called Wendy's one of their favorite ideas in the restaurant group.

Five reasons the Deutsche Bank likes Wendy's:

1. One of the cheapest stocks in the sector on an EV/EBITDA basis at 6.7x ‘11E
   vs. QSR sector at 8.3x, and MCD/YUM at 10x.
   
2. Wendy’s brand alone is worth
   about $4.40/sh, using conservative 7.5x multiple. Suggests zero implied value for
   rest of the business and offers “free option” on upside drivers.
   
3. Our checks suggest Arby’s sales are starting to bottom. We’ve raised our Arby’s SSS forecast.
   
4. Expectations are low heading into results, as mgmt. has already guided down
   2H10.
   
5. Commodity costs are currently a headwind, but compares ease in 2011.

Shares of WEN are up 7.8 percent today to $4.84.

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