At first blush, Burger King's
On second thought
When looking deeper into the report, however, Burger King's results didn't quite hit the spot. Sales trends remain dismal. Fourth-quarter sales fell 15.8% versus the year-ago quarter, and global same-store sales decreased 2.4%. Comps in its U.S. and Canadian restaurants were even worse with a decline of 4.5%. That's not exactly the type of performance that warrants a 6% move higher. Still, for fiscal 2009, the company achieved some success, including worldwide same-store sales growth of 1.2% and a 28% increase in operating cash flow.
In addition, management's near-term outlook was less than reassuring. Burger King declined to provide specific guidance for fiscal 2010, citing "consumer uncertainties." But the company did reiterate its annual long-term growth targets of 6% to 7% for revenue and 15% for EPS.
Be careful
That said, the stock still looks reasonably priced based on next year's earnings estimates of $1.46, which gives it a P/E of less than 13. Unfortunately, with sales trends and operating expenses moving in the wrong directions, there is a good chance that analysts will become more pessimistic in the months ahead. If that's the case, Burger King shares would soon be trading at levels that are too pricey for this customer.
For those looking for a more appetizing quick-serve restaurant stock, two other choices -- McDonald's
Company |
CAPS Rating
|
Forward P/E |
Projected 5-Year
|
---|---|---|---|
Burger King |
** |
12.3 |
14.3% |
McDonald's |
**** |
14.0 |
9% |
Yum! Brands |
**** |
15.9 |
12% |
Buffalo Wild Wings |
*** |
22.0 |
22.3% |
Chipotle Mexican Grill |
*** |
23.6 |
22% |
Panera Bread |
** |
19.0 |
16.6% |
Source: Motley Fool CAPS and Yahoo! Finance as of Aug. 27.
My advice: Why buy a fickle Burger King when high performers such as Buffalo Wild Wings and Chipotle are still not too expensive?
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