Wendy’s Co. (WEN) Stock Moves Down and Here’s Why

Wendy’s Co. (NASDAQ: WEN) shares rose on Thursday Dec 1 with lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile, U.S. stocks opened with slight gains on Thursday.

The Dow Jones Industrial Average DJIA, +0.31% rose 38.22 points, or 0.2%, to 19,174, while the S&P 500 SPX, +0.01% added 2.1 points to 2,202, a rise of 0.1%.

The Nasdaq Composite Index COMP, -0.32% rose less than 1 point to 5,323, essentially unchanged on the day.
Shares of Wendy’s Co. (NASDAQ: WEN) were downgraded by analysts at Guggenheim in a note to their investors today. Guggenheim currently has a rating of Neutral on the shares. As a means of comparison, a number of other analysts have issued reports on the company in recent days, and Wendy’s Co. has earned a consensus one-year price target of $11.94, less than the opening price of $12.47. Wendy’s Co. stock has a 52-week high of $13.16. Downgrades occur when analysts consider that the future prospects for the security have dropped from the initial recommendation, often caused by a considerable and integral digression in the company’s actions, future direction or industry.

Wendy’s Co. (NASDAQ: WEN) shares last traded at $12.61, which represents a spike of $0.04 or 0.32% from the previous closing price. Opening at $12.47, they varied from $12.40 and $12.61 throughout the day.

Wendy’s Co. (NASDAQ: WEN) now has a market cap of 3.24B.

Wendy’s Co. (NASDAQ: WEN) Average Daily Trading Volume

The stock’s average daily volume is 3,822,700 shares out of a total float 173,141,000 and some 645,966 shares traded hands yesterday, lower than the average. Swing traders often use swings in trading volume to determine heavy volume accumulation or dissemination by institutional investors, so trading volume is likely to increase in the next few days.

However, just a day of significant buy side trading is not enough to assert a trend. As such, market traders will continue to look for institutional sponsorship as a cue that financial institutions are moving forward.

Institutional sponsorship is defined by ownership of a stock by mutual funds, banks, pension funds and other large institutions.

Institutional investors such as these retain teams of analysts that research thousands of stocks. Thus, watching their interests is a good way to make sure you are buying the right stocks.

Wendy’s Co. (NASDAQ: WEN) Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By identifying trends, moving averages allow traders to make those trends work in their favor and increase the number of successful trades.

With that in mind, Wendy’s Co. (NASDAQ: WEN) now has a 50-day MA of $11.32 and 200-day MA of $10.41. It has traded in a 52-week range between $8.89 – 13.16 and today’s last price is 4.18%% lower than the 52 week high of $13.16.

Earnings growth is a critical factor to consider when investing in stocks and investors seek companies that have grown their earnings at least 25% or more over the past 3 years.

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