By Evie Liu

Wendy's stock has drawn renewed attention after Nelson Peltz, the activist investor and founder of Trian Partners, said shares of the fast-food chain are undervalued and that his firm may explore ways to enhance shareholder returns.

Peltz's Trian Fund Management owns about 16% of Wendy's outstanding shares. In a regulatory filing on Wednesday, Peltz indicated that Trian is evaluating a range of potential moves to unlock additional value from its investment.

While the filing didn't outline specific actions, its language suggests Trian could purchase additional Wendy's stock, sell part or all of its holdings, or push for changes including leadership adjustments or transactions like a merger or sale. The activist investor had weighed a takeover bid for the chain in 2022.

The news about Peltz, who has a long history of pushing for changes at consumer-facing companies and served as Wendy's chair for 17 years until 2024, spurred a flurry of buying. Wendy's stock jumped nearly 17% on Wednesday, marking its largest daily percentage gain since June 2021. Shares fell 1.5% in Thursday trading.

Wendy's shares have tumbled 65% over the past three years, trailing behind both the broader market and other restaurant stocks. The company's board of directors said if Trian submits a proposal, they will carefully evaluate it.

Before Peltz's disclosure, the stock was trading at roughly eight times forward earnings, according to FactSet, the lowest level since 2008. McDonald's stock is at about 25 times and Restaurant Brands International, which owns Burger King, is at 17 times.

Like many restaurant companies, Wendy's has been grappling with softer traffic as consumers cut back on dining out after years of higher prices. Operating costs have remained elevated, squeezing profit margins.

In 2025, Wendy's global systemwide sales declined 3.5% from a year earlier. Even as the chain opened a net 157 new restaurants, comparable sales at existing locations continued to fall. Total revenue was down 3.1% from 2024, while adjusted earnings shrank 12%.

Another challenge is that competition has intensified. Companies are investing heavily in value offerings, menu innovation, digital ordering, loyalty programs, and delivery partnerships.

Larger rivals such as McDonald's have been better positioned to absorb those costs. Bigger chains also benefit from better opportunities to expand overseas, stronger balance sheets, and greater leverage with suppliers in terms of pricing.

Whether Wendy's can make the necessary investments is "questionable," wrote Stifel analyst Chris O'Cull last week. The analyst said profitability for Wendy's franchisees has fallen significantly, while the company itself has a lot of debt and dividend obligations.

The chain is at risk of "entering a downward spiral," wrote O'Cull, warning that declining sales and margin pressures could leave it with less money to spend on advertising. That could weaken the brand and lead to even lower sales.

"We've seen this dynamic with some of the smaller pizza and bar-and-grill players," he told investors.

Wendy's has been closing many underperforming restaurants. Although that could improve profitability, it has reinforced the view among some investors that the brand is still working through operational challenges.

Activist involvement can act as a catalyst for change, but it isn't a guarantee. Investors will closely watch Peltz's next moves as well as any signs of improvement at Wendy's in coming quarters.

Write to Evie Liu at evie.liu@barrons.com

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February 19, 2026 13:10 ET (18:10 GMT)

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