What attracts me to Wendy's/Arby's Group (NYSE: WEN) is that the fact that the company is in the midst of a turnaround plan that appears to be headed in the right direction. Mr. Market, on the other hand, wants to wait until the plan has firmly succeeded before rewarding investors. This desire for certainty translates into potential opportunity for investors today.

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Two Great Brands
First off, Wendy's and Arby's are two quality brands in the restaurant industry. To be quite honest, what pushed me to take a closer look at this company is hearing a lot of talk in my hometown about how Arby's is suddenly better than ever.

Both restaurant concepts have been around for years and both offer a different offering to the consumer. (For more, see Sinking Your Teeth Into Restaurant Stocks.)

Very Budget Friendly
Like McDonalds (NYSE:MCD), Jack in the Box (Nasdaq:JACK) and Yum! Brands (NYSE:YUM) KFC and Taco Bell brands, the Wendy's/Arby's Group offers very budget friendly foods, a big plus in today's environment.

While many consumers are opting for the grocery store instead of restaurants, WEN provides customers with many items for just 99 cents. In many cases, you can feed a family of four for under $10 at both these restaurants. Once you factor in the costs and time to go the grocery store, alternatives like Wendy's are quite reasonable.

Turnaround Catalysts
The Wendy's/Arby's Group, with a market cap of $2.30 billion and an enterprise value of $3.28 billion, is the third largest quick service restaurant company. The company is owned and franchised stores total approximately 10,000.

The company is in the middle of strategic initiatives aimed at strengthening the brand image of the store concepts and managing the stores for efficiency. Such goals appear to be headed in the right direction: in the second quarter, adjusted EBITDA was $117 million up 13% from the comparable 2008 quarter.

The company is on track to eliminate nearly $50 million in G&A expenses in 2009, which will further strengthen operating performance. (For more, see What Owning A Stock Actually Means.)

You may have seen the recent commercials that Wendy's is now offering boneless chicken in its stores - in June this led to record sales. The company continues to get great press from the quality of its fast food relative to other players in the space. Recently, the company announced major international franchise agreements internationally, a relatively underserved area for Wendy's and Arby's.

The Bottom Line
As the company continues to successfully execute its turnaround strategy and increase EBITDA, the share price will likely follow. At $500 million EBITDA, the company is trading at an implied multiple of 6.5 times EV/EBITDA. This compares to 9 times for McDonalds and 9.3 for Yum! Brands. While these two companies are operating much more efficiently than Wendy's/Arby's Group at this point, WEN is improving efficiency and expanding strategically. Continued progress should enable Wendy's to earn a more comparable multiple to its peers, rewarding investors today.

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