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Ticker Shock: Four Reasons Burger King Stock Doesn't Look Appetizing


Wednesday's top stories and stocks with potential to move.

It was a Gilligan's Island commute home last night -- a regular 3-hour tour, door-to-door.

Asian stocks rose overnight. The Hang Seng and the Nikkei were up 0.1% and 1.36%, respectively. However, European stocks were showing me some red earlier this morning. And here in the US, we're currently trading higher.

Here's what I'm focused on this morning:

Burger King (BKC):
Although the burger chain's revenue line for its fourth quarter looked a bit undercooked (compared to what analysts were expecting), the company did manage to turn in $0.43 on the bottom line, which was a dime north of expectations.

Some thoughts:

1. Its comps were off 2.4%, which shows that not everything was rainbows and butterflies.

2. A lower tax rate also helped gas the EPS number by $0.07, so it's hard to get too excited about the beat.

3. Burger King bulls, switch off your monitors: Of the fast-food burger joints -- in fact, of all food chains -- McDonald's (MCD) is still my favorite.

4. With all that said, it certainly wasn't a terrible quarter and there's some upside potential here with the company trading at just 12.8 times the 2010 estimate.

For my last take on Burger King, click here.

As my colleague Justin Sharon points out, the company landed upgrades from Bernstein and Morgan Stanley. I'll drink to that!

1. First, I'm noticing the current year and next year's estimates have moved up over the last two months or so. That's certainly a nice direction to be headed in.

2. The more I think about it, the bevy of big-name brands it has under its belt simply amazes me. Unless prohibition returns, I don't see how it won't do well in time.

3. One issue: I'd rather pick up a cold one on a pullback. Note that the stock has had a heck of a run over the last several months and I wouldn't be surprised to see some profit-taking.

Check out this other news, which was out this morning. I think you'll get a kick out of it.
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No positions in stocks mentioned.

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