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Sunday, 03/25/2001

WEN - Wendy's International

Company Description

Wendy's International, Inc. (NYSE:WEN) is one of the world's largest restaurant operating and franchising companies with $7.1 billion in system wide sales during 1999 and two quality brands - Wendy's and Tim Hortons. Wendy's Old Fashioned Hamburgers was founded in 1969 by Dave Thomas and is the third-largest quick service hamburger restaurant chain with more that 5,500 units in the United States, Canada and other international markets. Tim Hortons was founded in 1964 by Tim Horton and Ron Joyce and is the largest coffee and baked goods restaurant chain in Canada. There are month than 1,800 Tim Hortons restaurants in North America.

Wendy's offers an extensive line of always fresh, made to order hamburgers, chicken sandwiches, fries, salads, Fresh Stuffed Pitas, chili and baked potatoes. The Wendy's menu is designed to offer a variety of nutritious foods at several price points in order to appeal to a wide base of consumers.

(source: Wendy's)

Reasons To Invest

Wendy's is a corporation with a history of stable financial performance, which is of concern to long-term investors. The company is expected to grow its bottom line by roughly 15 percent annually, over the next several years, which is more than the S&P 500's expected growth rate in addition to Wendy's peers' collective expected earnings growth rate. In addition, its shares trade at a discounted valuation as measured by their price-to-earnings ratio of 14. When compared to the broader market, shares of Wendy's offer a better value while the company is expected to grow more than the broader market average. That formula gives shares of Wendy's a favorable price-to-earnings growth (PEG) ratio of 0.94. A PEG below 1.00 if often considered a value in the collective minds of institutional investors and money managers, who may begin to key in on shares of Wendy's. What's more, the company operates with a clean balance sheet, which is relatively debt free. Just recently, Wendy's announced that its earnings were adversely impacted during its fourth quarter due to higher energy and beef costs. This announcement caused a pullback in shares of Wendy's. Moreover, the recent scare concerning disease across the Atlantic may have exacerbated the decline in shares of Wendy's. However, company officials reiterated their view that earnings would rebound in the second half of calendar 2001 as energy costs ease and the beef scare comes to pass. In addition, Wendy's announced that it would employ a share buyback program beginning in early May. The share buyback move by Wendy's is seen as a long-term positive because it reveals that the company believes its stock is undervalued at current levels and will appreciate in price over the long-term. Obviously, we like the idea of share buyback programs and feel confident in investing side-by-side with the company itself. Finally, shares of Wendy's represent not only a compelling value at current levels, but also a unique way to diversify systematic risk out of a stock portfolio. Because Wendy's is, in essence, a food retailer, its sells are less impacted by broader trends in the economy. As such, the stock can act as a diversifying tool and a way to minimize risk in a long-term investing portfolio.

DRIP Information:

Shares to Qualify = 1           Accept Foreign Accounts: Yes
Auto-reinvestment  = Yes        Temper Enrollment Serv:  Yes

Min/Max Investment = $20,000/year
Reinvestment Fees: 
Dividend: 0           Cash: 0        Auto ReInvest: 0

Transfer Agent:

American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038

Attn: Dividend Reinvestment Dept.
Wendy's Dividend Reinvestment Plan


Industry Group:      Restaurant   52-week high=$27.13
Annual Dividend Per Share=$0.24   52-week low =$16.75
Last earnings 01/00    est=0.38   actual=0.39
Next earnings 04-15    est=0.34   versus=0.30
                                  P/E = 15
Analyst Ratings:
Strong Buy    = 5
Moderate Buy  = 5
Hold          = 5
Moderate Sell = 0
Strong Sell   = 0


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