Earnings Preview: Wendy's/Arby's Group

NEW YORK - Wendy's/Arby's Group Inc. reports earnings for the fiscal third quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: In September, Wendy's International Inc.'s shareholders agreed to a buyout by Triarc Cos., which owns the Arby's fast-food chain.

Triarc said in April it would buy Wendy's for $26.78 per share in an all-stock deal after Wendy's rejected at least two earlier offers by Triarc's owner, billionaire investor Nelson Peltz.

The combined company was renamed Wendy's/Arby's Group Inc. Thursday's quarterly report will be the first since the deal closed.

Investors will likely be watching to see how the two concepts dealt with a downturn in the economy that restricted consumer spending and led more diners to avoid meals out. Fast food chains have largely benefited from the economic turmoil due to their lower prices and quick service. But Wendy's — the nation's No. 3 hamburger chain — has not fared as well as its competitors in recent quarters.

BY THE NUMBERS: The company has not offered any guidance for the quarter. Analysts polled by Thomson Reuters expect profit of 14 cents per share.

ANALYST TAKE: In a late September note to clients, Goldman Sachs analyst Steven T. Kron called Wendy's a "restructuring story" with cost cuts and Arby's synergies likely to drive its results in the near term.

"Longer-term, management will seek to rebrand Wendy's (it has been losing market share), revitalize the menu (remove products, broaden the offering)" and attempt to broaden its menu into breakfast items, he said.

Kron, who has a "Neutral" rating on the stock, also said he expects low single-digit sales growth in the next year at the combined company.

STOCK PERFORMANCE: Shares fell 18 percent during the quarter and dropped 67 percent in the past 52 weeks. The stock finished Tuesday's session at $3.65.

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