Wendy's/Arby's prospects look appetizing-Barron's

NEW YORK, June 28 (Reuters) - Wendy's/Arby's Group Inc (WEN.N: Quote, Profile, Research) looks worthy despite a recent sell-off in the hamburger chain's stock and doubts about a recent bond offering, Barron's reported on its website on Sunday.

Barron's quoted activist investor Nelson Peltz as saying that "this is a phenomenal company that is truly misunderstood and was mismanaged for years ... We think the company is significantly undervalued."

Peltz's view is more of a reflection of Wendy's/Arby's expected cash flow, measured by earnings before interest, taxes, depreciation and amortization (EBITDA), than its earnings, according to the report.

Using a multiple of nine on 2011 EBITDA, according to Peltz's suggestion, the chain would be valued at $5 billion. Deducting $1 billion of net debt and dividing by 470 million shares outstanding, its stock would theoretically be worth $8.50, Barron's said, a far cry from its closing value of $3.63 on Friday.

The report said Peltz's operational assumptions are not aggressive, and do not include benefits from factors such as putting its cash to work, new products, better marketing or reintroduction of breakfast slated for late next year.

Peltz and his partner Peter May, who own 22 percent of Wendy's/Arby's shares doubled their bet on the company late last year, according to the report. The daughter of Wendy's founder said she is confident about the company's management for the first time since her father died, the report added.

The company recently sold $565 million of 7-year senior notes. (Reporting by Aarthi Sivaraman, Editing by Maureen Bavdek)