Burger King Holdings, Inc. (BKC)

nfantis (87.52) Submitted: 10/31/07 4:01 PM : Start Price: $26.10 BKC Score: 15.20

I am truly surprised to see BKC at 1 star and McDonalds (MCD) at 4.

I recommend BKC for a number of reasons. From a business perspective, BKC seems more appealing than McDonald's. They continue to try out new items on the menu, and introduce new things more often than Taco Bell. McDonald's menu, and food is bland. Their focus on health-conscious food has taken away from their ability to create new items that are appealing. I just think BKC is "sexier" than MCD. Finally, the quality of food seems much more consistent than that of MCD.

Secondly, the P/E ratios of both companies are interesting. MCD has a P/E ratio of 30.75 (Google) compared to BKC with a ratio of 24.21. I am not quite sure how MCD future growth prospects can justify a ratio higher than that of BKC. Burger King has 1/3 the stores of MCD, is in 69 countries where MCD is in over 100. BKC plans to add 180 stores in Africa, Middle East, and Brazil and over 250 stores in new Asian territories by 2012 (Wikipedia). If MCD at such a high multiple, either that must come down or BKC must go up because the growth prospects for BKC are much higher.

BKC has beat analysts expectations 4 out of the last 5 quarters. It is a ValueLine top pick and is rated 5 stars (strong buy) by the S&P rankings. Balance sheet is also improving.

I say outperform.

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