2-Star Stocks Poised to Plunge: Burger King

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Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, fast-food company Burger King Holdings (NYSE: BKC) has received the distressing two-star ranking. While one-star stocks have been the worst performers, our data has shown that two-star stocks still lag the market by a significant margin and should be approached with caution; conversely, highly rated stocks have outperformed the S&P.

With that in mind, let's take a closer look at Burger King's business, and see what CAPS investors are saying about the stock right now.

Burger King facts

Headquarters (founded)	Miami, Florida (1954)
Market Cap	$3.10 billion
Industry	Restaurants
TTM Revenue	$2.53 billion
Management	CEO John Chidsey (since 2007) CFO Ben Wells (since 2006)
Net Income Growth (average, last five quarters and most recent quarter)	23% and 2%
Competitors	McDonald's (NYSE: MCD), Yum! Brands (NYSE: YUM)
CAPS members bearish on BKC also bearish on	Ford Motor (NYSE: F), Research In Motion (Nasdaq: RIMM)
CAPS members bullish on BKC also bullish on	Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 106 of the 401 members who have rated Burger King -- some 26% -- believe the stock will underperform the S&P 500 going forward. These bears include CliftonParkGMan and CAPS All-Star ibarz.

Early last month, CliftonParkGMan made this Whopper of a prediction:

[F]ranchisee costs have escalated, especially food costs, and the average franchisee has negative comp cash flow and they will not be able to continue down the path of discounting unless they can sell more profitable products. Since their target advertising audience is the Young Adult Male (YAM's) they are also very value driven consumers

In a pitch from later in the month, ibarz shares that bearish sentiment, citing the company's massive debt load as reason to be fearful:

Saddled with debt before the "owners" puts this on IPO. What's amazing is, we have seen Burger Kings struggle for the last 20 something years, but apparently the new owners thought that buying [Burger King], saddling it with almost a billion dollars in debt via paying themselves a dividend, and THEN offering it to the public, would fix what has ailed it for the last 3 decades. Amazing.

What do you think about Burger King, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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