Earlier today, Dine Brands (DIN; Buy) reported Q1 adjusted EPS of $1.90, ahead of our $1.80 forecast and above sell-side consensus of $1.82.
Our data-driven checks regarding Wendy’s (WEN; Neutral) suggest softness during November. As such, we lower our Q4E same-store sales for the Wendy’s North America system by 70 basis points to a new sell-side low (according to Consensus Metrix data) of 0.0%. Our checks for November 2018 were the worst for any month in our process since those we did for February 2012. While our 70 basis-point reduction in our Q4E same-store sales forecast is not enough to budge our $0.15 EPS estimate for Q4E, upside potential on both the same-store sales front and the EPS front in the near term may be limited. And, depending on how December goes, there may be some downside risk. We reiterate our Neutral rating on WEN, and note the following:
With this report, we update our data-driven Kalinowski Fine Dining Index for Q4E from +1.3% to +0.8%. This 50 basis-point decrease is based on our latest proprietary checks/data as regards same-store sales performance so far for this segment during October and the first half of November.