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    plementing the efficiency model that management has suggested will be put in place, I believe they could beat current estimates.

    Based on relative valuations, shares could double within the near. Throw in the possibility of exceeding expectations, and shares could appreciate even more. The Tim Hortons IPO has created an opportunity to snatch up shares in Wendy’s at a very low valuation. This price discr

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    As my regular readers know, I am bearish on Tim Hortons. I think that the market is currently pricing them significantly higher than what I believe to be their intrinsic value. However, the fact that Tim Hortons is being priced so high, makes Wendy’s look very attractive given the 85% stake that they hold in THI.

    Given the closing price of Tim Hortons on friday, they have a market cap of about $5.75 billion. This makes Wendy’s stake in the company worth approximately $4.9 billion. Wendy’s market cap currently sits at $7.2 billion. Utilizing our first grade math skills, we will subtract Wendy’s Tim Hortons stake from their current market cap, and arrive at a figure of $2.3 billion. Considering that Wendy’s will be selling off its 85% stake before years end, the market is only valuing Wendy’s core business at our $2.3 billion figure that we derived. Let’s take a look at some ratios using our adjusted valuation of Wendy’s…

    * Trailing P/E: 10.2… McDonalds: 17

    * Forward P/E estimate: 7.4… McDonalds: 14.6

    * Price to Sales: 0.6… McDonalds: 2.1

    * Forward Price to Sales: 0.56… McDonalds: 1.95

    By all of these metrics, Wendy’s looks very cheap. Earnings growth should pick up nicely, as displayed in their forward P/E estimate. With management exploring various cost cutting and efficiency models. Also, with their proceeds from the Tim Hortons sale, I would expect them to pay down their outstanding debt. They only have $625 million in debt on the books, but at 15% interest (a stab, i dont know what the actual rate they are pating is) this detracts $100 million from earnings. By paying that off, and implementing the efficiency model that management has suggested will be put in place, I believe they could beat current estimates.

    Based on relative valuations, shares could double within the near. Throw in the possibility of exceeding expectations, and shares could appreciate even more. The Tim Hortons IPO has created an opportunity to snatch up shares in Wendy’s at a very low valuation. This price discre

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    lion. This makes Wendy’s stake in the company worth approximately $4.9 billion. Wendy’s market cap currently sits at $7.2 billion. Utilizing our first grade math skills, we will subtract Wendy’s Tim Hortons stake from their current market cap, and arrive at a figure of $2.3 billion. Considering that Wendy’s will be selling off its 85% stake before years end, the market is only valuing Wendy’s core business at our $2.3 billion figure that we derived. Let’s take a look at some ratios using our adjusted valuation of Wendy’s…

    * Trailing P/E: 10.2… McDonalds: 17

    * Forward P/E estimate: 7.4… McDonalds: 14.6

    * Price to Sales: 0.6… McDonalds: 2.1

    * Forward Price to Sales: 0.56… McDonalds: 1.95

    By all of these metrics, Wendy’s looks very cheap. Earnings growth should pick up nicely, as displayed in their forward P/E estimate. With management exploring various cost cutting and efficiency models. Also, with their proceeds from the Tim Hortons sale, I would expect them to pay down their outstanding debt. They only have $625 million in debt on the books, but at 15% interest (a stab, i dont know what the actual rate they are pating is) this detracts $100 million from earnings. By paying that off, and implementing the efficiency model that management has suggested will be put in place, I believe they could beat current estimates.

    Based on relative valuations, shares could double within the near. Throw in the possibility of exceeding expectations, and shares could appreciate even more. The Tim Hortons IPO has created an opportunity to snatch up shares in Wendy’s at a very low valuation. This price discr

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    our $2.3 billion figure that we derived. Let’s take a look at some ratios using our adjusted valuation of Wendy’s…

    * Trailing P/E: 10.2… McDonalds: 17

    * Forward P/E estimate: 7.4… McDonalds: 14.6

    * Price to Sales: 0.6… McDonalds: 2.1

    * Forward Price to Sales: 0.56… McDonalds: 1.95

    By all of these metrics, Wendy’s looks very cheap. Earnings growth should pick up nicely, as displayed in their forward P/E estimate. With management exploring various cost cutting and efficiency models. Also, with their proceeds from the Tim Hortons sale, I would expect them to pay down their outstanding debt. They only have $625 million in debt on the books, but at 15% interest (a stab, i dont know what the actual rate they are pating is) this detracts $100 million from earnings. By paying that off, and implementing the efficiency model that management has suggested will be put in place, I believe they could beat current estimates.

    Based on relative valuations, shares could double within the near. Throw in the possibility of exceeding expectations, and shares could appreciate even more. The Tim Hortons IPO has created an opportunity to snatch up shares in Wendy’s at a very low valuation. This price discr

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    ed in their forward P/E estimate. With management exploring various cost cutting and efficiency models. Also, with their proceeds from the Tim Hortons sale, I would expect them to pay down their outstanding debt. They only have $625 million in debt on the books, but at 15% interest (a stab, i dont know what the actual rate they are pating is) this detracts $100 million from earnings. By paying that off, and implementing the efficiency model that management has suggested will be put in place, I believe they could beat current estimates.

    Based on relative valuations, shares could double within the near. Throw in the possibility of exceeding expectations, and shares could appreciate even more. The Tim Hortons IPO has created an opportunity to snatch up shares in Wendy’s at a very low valuation. This price discr

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    plementing the efficiency model that management has suggested will be put in place, I believe they could beat current estimates.

    Based on relative valuations, shares could double within the near. Throw in the possibility of exceeding expectations, and shares could appreciate even more. The Tim Hortons IPO has created an opportunity to snatch up shares in Wendy’s at a very low valuation. This price discrepency must be corrected, as fundamentals govern valuations in the long run. This is a great value play at these levels, I’m sure Graham would concur.

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