All those late night snackers mean big dollars for Burger King (NYSE:BKC). Sales and earnings are up for the fourth quarter, thanks in large part to the company's expanded store hours - satisfying our desire for the so called "fourth meal".
Although the stock is down about 10% over the past couple months, there are several signs that the company is on the way up.
Take a look at the company's fiscal Q4 results and you'll see that things are looking up. During the recent quarter, the company's sales increased 11% to $590 million, and its earnings (adjusted for one-time and extraordinary expenses) came in at 29 cents per share - a full two cents ahead of Wall Street estimates.
Moreover, the company's worldwide same store sales were up a healthy 4.4%. And in the U.S. and Canada, where everyone is concerned about whether the consumer will continue to spend money on casual dining, same store numbers were up a healthy 4.8%.
The company said the reason for the healthy numbers was the "fourth meal" revenue.
More Tasty News
Of course, there were some other attractive features about the quarter worth mentioning as well. For example:
• During the period worldwide average restaurant sales (ARS) grew 8% to $311,000.
• The company's restaurant margin in the U.S. and Canada increased 30 basis points during the quarter and by 120 basis points for the full year.
• Its board of directors authorized a $100 million repurchase program.
Next, let's take a look at the valuation. Burger King currently trades at about 18.5-times this year's consensus estimate of $1.27 per share. It's also expected to grow its bottom line at a roughly 16% pace - to $1.47 per share - in the coming year and at a 15.1% pace in each of the next five years.
That's pretty cheap, given that McDonald's (NYSE:MCD) trades at roughly 17.5-times this year's consensus estimate, but it is only expected to grow its earnings at about a 9% in the coming year to $3.02 per share and at a roughly 8.8% per-year for the next five years.
The Downside To This Story
Investors need to remember that although Burger King is currently performing quite well, it is up against plenty of competition. Remember, Wendy's (NYSE:WEN) continues its foray into the breakfast market, and Starbucks (Nasdaq:SBUX) has been aggressively pushing its muffins, bagels, warm sandwiches and other breakfast fare.
Also, McDonald's has been drawing in plenty of foot traffic with new menu introductions, such as iced coffee. Another concern I have is that billionaire Nelson Peltz, and his management company Triarc, are reportedly doing their due diligence on Wendy's.
This is scary, at least to me, because if Wendy's is taken private there's a chance that it could become much more competitive in certain markets. Remember, as a private company it could probably save millions on filing fees, news releases and accounting fees, and theoretically plunge that money back into advertising.
Looking to cook up a market-stomping stock portfolio? Check out our FREE report "7 Ingredients to Market Beating Stocks" and get started right now!
Mutual Funds & ETFsLearn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
Investing NewsWill Ferrari's shares move fast off the line only to sputter later?
Stock AnalysisHere are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
InvestingThe further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
Fundamental AnalysisOptions market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
Stock AnalysisCan these two oil stocks buck the trend?
Investing NewsAlcoa plans to split into two companies. Is this a bullish catalyst for investors?
Stock AnalysisIf you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
Investing NewsA rate hike would certainly alter the investment scene, but would it be for the better or worse?
Investing NewsWith market volatility high, you may think it is time to run for corporate bonds instead of stocks. Before you do take a deeper look into which is better.
When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>