Wendy's Stock Surges Amid High Short Interest Ahead of Earnings Report

Wendy's (WEN) stock has surged 5.2% amidst high short interest, with 11.1% of its float being shorted. This volatility is expected to continue until the company's earnings report on August 8, where analysts project revenues of $558.4 million and earnings per share of $0.26.

Wendy's (WEN) stock has experienced a significant surge, opening with a 5.2% gain on Wednesday, July 23, amidst high short interest. The fast-food chain's shares jumped as much as 12% in the premarket session, driven by the sudden interest from investors in high short interest stocks such as Kohl's (KSS), GoPro (GPRO), and Krispy Kreme (DNUT) [2]. This volatility is expected to continue until the company's earnings report on August 8, where analysts project revenues of $558.4 million and earnings per share of $0.26 [2].

Wendy's shares have been in the spotlight due to its high short interest, which stands at 11.1% of the total float [2]. This high short interest has made the stock a speculative favorite among retail traders, who have been rotating into names with elevated short interest as part of the broader meme stock frenzy [1]. The stock's performance has been volatile, with Wendy's stock down 25% versus its year-to-date high even at its intraday peak [1].

Analysts remain cautious about Wendy's prospects, with BTIG analyst Peter Saleh reiterating a "Neutral" rating ahead of its earnings report. Saleh emphasized the need for Wendy's to commit to remodeling and modernizing its stores to compete with larger peers like McDonald's (MCD) [1]. Despite these concerns, Wendy's stock offers certain attractions, such as a super lucrative dividend yield of 5.1% and a forward price-earnings (P/E) multiple of 11.7x, which is significantly lower than its larger peer McDonald's [1].

Wall Street analysts also see potential upside in Wendy's stock, with the consensus rating on WEN shares sitting at "Hold" but with a mean target of $14.17, indicating potential upside of about 30% from the current price [1]. The earnings conference call for Wendy's will feature interim CEO Ken Cook, who took over from Kirk Tanner on July 18 [2].

References:
[1] https://www.goldenbeltcoop.com/news/story/33620084/wendy-s-pops-on-meme-stock-hype-how-should-you-play-wen-here
[2] https://seekingalpha.com/news/4470640-wendys-shoots-higher-amid-meme-type-interest-in-highly-shorted-stocks