Fans of fast-food burgers have lots of choices. But with McDonald's
Comparable same-store sales for Checkers' company-owned units grew by a juicy 6.4% during its first quarter of fiscal 2005, while its franchise-owned units grew comps by 6.5%. The company's net sales for the quarter, meanwhile, increased 3.2% to $44.4 million, compared with the same period a year ago. Low-single-digit growth doesn't seem very appetizing, but any growth at all is a credit to Checkers' success, given that it did so with 17 fewer units.
However, the company did face some challenges with higher audit expenses and food costs. Because of the increased expenses, operating profit margins decreased to 9.7%, a decline of 3% from last year's level.
Because of the strain on profit margins, Checkers' earnings growth was nearly flattened -- it grew just 1.5% to $2.5 million. But on the brighter side, its earnings-per-share growth was 10.5% as a result of its share buyback program.
So is this burger worth a bite? Single-digit revenue and net income growth will hardly get an investor excited. And when you toss in the higher expenses pressuring its margins, this enterprise looks like it's a long way from the checkered flag.
But Checkers Drive-In does have a unique concept -- the double drive-through -- that sets it apart from the crowd. The burger biz is a tough one, but Checkers has managed to successfully carve out a piece of the beef pie.
Whether its stock is worth a bite ultimately depends on your taste buds. The enterprise is not overly pricey, but it's also nowhere near mouth-watering. If you're interested in being a partial owner in this concept, stake a claim with a few shares, and then wait for a better deal before taking a bigger bite.
Check out these articles for more on the burger biz:
Do you insist on a bargain in your investments? So does the Motley Fool Inside Value team. Take a free trial today to learn more.
Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.