Mary Vanac
Columbus Dispatch

A handful of stock analysts have taken a shine to Wendy’s in recent months — evidence that the fast-food company’s brand transformation is taking hold.

Shares of Dublin-based Wendy’s Co. have risen about 50 percent since April, assuming reinvested dividends, on the prospects of rising sales and profit from the company’s $500 million store renovation program, as well as new products and promotions.

Wendy’s sales could outpace those of competitors in coming quarters “as new products are supported by more effective use of marketing dollars,” KeyBanc Capital Markets analysts Christopher O’Cull and David Carlson wrote in a Sept. 13 research report.

The company upgraded Wendy’s shares to “hold” from “underperform.”

Earlier, Argus Research Co. analyst John Staszak raised his rating on Wendy’s shares to “buy” from “hold,” saying the company’s improved menu and store remodeling program should help drive higher sales.

New products also are on the minds of analysts.

Wendy’s Pretzel Bacon Cheeseburger, introduced in July, could “lead to some meaningful acceleration in Wendy’s same-store sales,” Janney Capital Markets analysts Mark Kalinowski and Amy Babington wrote in a May 24 research report.

“Our industry sources inform us that when the Pretzel Bacon Cheeseburger was in test (early this year), its performance ranked amongst the best of any Wendy’s test items from the last 20 years,” Kalinowski and Babington said in upgrading Wendy’s shares to “buy” from “neutral.”

All three investment firms make a market in Wendy’s shares. That means the firms could own the company’s shares from time to time. KeyBanc and Janney also do investment-banking business with Wendy’s, according to their research reports, in which potential conflicts of interest are disclosed to investors.

The upward march of Wendy’s stock price quickened in late July after the company beat analysts’ earnings expectations and announced a plan to sell one-third of its company-owned U.S. stores to franchisees who promise to help speed up the store renovation program.

Wendy’s expects that selling up to 425 stores could save the company $30 million a year by boosting its operating efficiency, as well as strengthen its cash flow with higher royalty and rent income.

It’s a smart strategic move, said Will Slabaugh, restaurant analyst for Stephens Inc. in Little Rock., Ark., at the time.

“It puts those stores in the hands of franchisees who are locally based and will likely run the stores more efficiently than the company could,” Slabaugh said.

Wendy’s recently said it would ask its bank lenders for an additional $225 million with which to repurchase debt due to be redeemed next year.

Vicki Bryan, high-yield analyst for Gimme Credit, an independent bond-research firm, called Wendy’s potential debt refinancing “another positive step to scrub its balance sheet of high-cost debt,” in a Sept. 10 research comment.

“We expect steady improvement this year for the Wendy’s Co. as it continues to roll out its successful, three-year turnaround strategy under its most credible management team yet, with positive trends accelerating into 2014,” Bryan said in her comment.