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Notable news items/price action from the past twenty-four hours.

  • WEN reported $0.01 ex-items versus the Street, in line with prior guidance from January 26th.  The company is guiding below the street on EBITDA but assuming the sale of Arby’s.  Affirming Wendy’s longer term target of 10% to 15% EPS growth, beginning in 2012.
  • WEN is to reopen stores in Japan, a market it quickly exited in 2009.  The company sees at least 71 stores in Japan in five years.
  • DIN reported 4Q EPS of $0.59 versus consensus $0.64.  Earnings included a $7.7M charge related to the default of an IHOP franchise.  Guidance for FY11 is for Applebee’s domestic system-wide same-store sales performance to range between 1% and 3% and company-operated restaurant level-margin of between 14.8% and 15.2%.
  • MCD traded poorly yesterday as headlines highlighted a decrease in its advertising spend and the movement of the brand from its core business to lattes and other beverages.  This is all confirmative of my Black Book of mid-January.
  • PEET continues to trade strongly following an upgrade yesterday that boldly stated that a deal would be done between PEET and GMCR by March 6th for Peet’s to enter the k-cup market.
  • DPZ gained on strong volume. 
  • CBRL gained 60 bps on accelerating volume following a difficult fortnight of trading.  Gasoline prices have been pressuring this stock.
  • MSSR traded down sharply on very high volume yesterday.  The stock was downgraded this morning.   On Tuesday, 4Q EPS came in at $0.22 ex-items versus $0.24.

TALES OF THE TAPE: WEN, DIN, MCD, PEET, GMCR, DPZ, CBRL, MSSR - stocks 33

Howard Penney

Managing Director