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What: Shares of Wendy's climbed 10% today after the fast-food restaurant operator posted strong quarterly results and announced a plan to sell about 425 restaurants by mid-2014.
So what: The stock has soared over the past year on optimism over its rebranding initiatives, and today's second-quarter results -- EPS of $0.03 on a 260-basis-point operating margin increase -- only reinforce those good vibes.Additionally, management's decision to sell 425 company-owned restaurants to franchisees should give Wendy's a much more stable revenue stream from a higher percentage of royalty and rent income.
Now what: In connection with the sales plan, Wendy's approved a 25% bump in its quarterly dividend and also authorized a share repurchase program for up to $100 million. "The dividend increase and share repurchases are important elements of our financial management strategy," CFO Steve Hare said. "We are committed to continuing to deploy capital to drive the organic growth of our restaurant business, in addition to returning cash to shareholders." With the stock now up a whopping 80% over the past year and trading at a forward P/E of 30, however, much of that growth might already be baked into the valuation.
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The article Why Wendy's Shares Got Gobbled Up originally appeared on Fool.com.
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