The Wendy’s Co (WEN)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 45.54% | 44.79% | 48.42% | 45.80% | 41.58% |
| Operating profit margin | 17.51% | 16.86% | 19.34% | 15.53% | 15.36% |
| Pretax margin | 12.81% | 11.62% | 12.68% | 8.81% | 10.03% |
| Net profit margin | 9.37% | 8.46% | 10.56% | 6.80% | 8.01% |
The profitability ratios of Wendy's Co indicate a consistent performance over the past five years. The gross profit margin has fluctuated slightly, ranging from 63.10% to 67.76%, with a current value of 63.58%. This suggests that the company is effectively managing its production costs and generating profits from its core operations.
The operating profit margin has seen a similar trend, with values ranging from 15.86% to 17.38%, and currently standing at 17.32%. This indicates the efficiency of Wendy's Co in turning its revenue into operating profits after accounting for operating expenses.
The pretax margin has shown fluctuations as well, varying from 8.81% to 12.81%, and currently at 12.81%. This ratio reflects the company's ability to generate profits before accounting for taxes and indicates a consistent performance in this aspect.
The net profit margin, a key indicator of overall profitability, has ranged from 6.80% to 10.56%, with the current value at 9.37%. This ratio demonstrates the company's ability to generate profits after accounting for all expenses, including taxes.
Overall, Wendy's Co has maintained stable profitability ratios over the past five years, indicating effective cost management and operational efficiency in generating profits. However, the fluctuations in some ratios suggest potential areas for improvement to further enhance profitability in the future.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 7.37% | 6.42% | 7.19% | 5.34% | 5.26% |
| Return on assets (ROA) | 3.94% | 3.23% | 3.93% | 2.34% | 2.74% |
| Return on total capital | 13.26% | 11.13% | 12.52% | 9.77% | 10.36% |
| Return on equity (ROE) | 66.00% | 38.09% | 45.92% | 21.44% | 26.52% |
Wendy's Co has shown improvement in its profitability ratios over the past five years. Starting with the Operating Return on Assets (Operating ROA), the company's performance has consistently increased year over year, reaching 7.29% at the end of 2023. This indicates that Wendy's is generating a higher operating profit relative to its total assets, which is a positive sign for its operational efficiency.
Moving on to the Return on Assets (ROA), Wendy's has demonstrated a gradual improvement in utilizing its assets to generate earnings. The ROA increased from 2.74% in 2019 to 3.94% in 2023, showcasing the company's ability to generate profits relative to its asset base.
Furthermore, the Return on Total Capital and Return on Equity (ROE) ratios also exhibit positive trends for Wendy's Co. The Return on Total Capital has consistently increased over the years, reflecting how effectively the company is utilizing its total capital to generate returns. The ROE, indicating the profitability relative to shareholders' equity, has shown significant improvement, reaching 66.00% in 2023 from 26.52% in 2019.
Overall, Wendy's Co's profitability ratios demonstrate a consistent upward trajectory, reflecting improved operational efficiency and effective utilization of assets and capital to generate profits for its shareholders.