The technical rebound of The Wendy's Company should be stopped in the coming trading sessions.

From a fundamental viewpoint, the group has not sufficient quality to hope for a continuation of its bullish trend. Indeed, Surperformance rating largely punishes The Wendy's Company because of an excessive valuation with an EV/Sales ratio higher than its peers. The deterioration of the financial situation and the increasing leverage for the two next fiscal year emphasize risks. Net Debt/EBITDA ratio at 2.66 should become worst next year at 2.84.

Graphically, the security is trading in a bearish trend. In the short-term, the stock has rebounded on the USD 4.25 support area toward its mid-term resistance. This rebound seems technical and is not likely to continue. Indeed, moving averages in the long-term are still in a downtrend and that argue for a continuation of the decrease in prices.

The bearish trend and fragile fundamentals let envisage a continuation of the downtrend. An entry point could be fixed close to the USD 4.6 resistance in order to take a short position in The Wendy's Company. The target price will be the mid-term support area at USD 4.25 and a stop loss order will be placed above USD 4.6.