Red Robin Gourmet Burgers, Inc. (RRGB), McDonald’s Corporation (MCD), Burger King Worldwide Inc (BKW): The Best Burger (Stocks) in America

The company will be reporting Q2 earnings July 22 and will have to better those Q1 earnings of global comps, consolidated revenue, and operating income all down 1%. Diluted EPS was up 2% to $1.26. Analysts will be eager to hear about  the debuts of their egg white omelet, snack wraps featuring steak and chicken, and the Fish McBites.

The Robin is bobbin‘ along

Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)’s trailing P/E is a pricey 30.05 with a forward P/E of 21.98. Analysts’ growth estimates have come down from 13.77% five year EPS growth rate predicted in April to 9.50%. This has driven up the PEG from a reasonable 1.44 in April to its current 2.71.

The stock has had an amazing run, gaining 78.74% over the last year. With great stock runs comes great short interest increases, now at 13.10%.

The likely catalyst to earnings growth is its downsized concept of its 468 sit-down restaurants, Burger Works. The 5,000 square-foot casual dining restaurants are still their mainstay, but with most of the signature Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) menu and alcohol these should prosper as they open at airports, stadiums, malls, college campuses, etc. nationwide. They’ve rolled out four in Colorado and one at Ohio State University. Red Robin’s Burger Works will increasingly challenge the big three as it takes a fast food approach to expansion.

Winning with Wendy’s?

Wendy’s next big thing is the Pretzel Bacon Cheeseburger among other new menu items like waffle cone frostys. The company has also been experimenting with a Value Menu for the first time.

Wendy’s  forward P/E is 25.48 with a yield of 2.70%. Its price/book is the cheapest of these at 1.18 and a PEG of 1.89. The stock has gained 24.16% over the last year yet the short interest at 13.50% is growing.

Wendy’s reported Q1 results on May 8 with reiterated guidance on EBITDA and only slightly higher EPS outlook due to refinancing benefits. Operating margin at 7.38% is better than Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)’s at 4.37% but  worse than Burger King Worldwide Inc (NYSE:BKW) and McDonald’s Corporation (NYSE:MCD). Slowly growing margin expansion was cited by Wells Fargo in its initiation of coverage in June for only a Market Perform rating, although it noted its EV/EBITDA is better than competitors’.

The stock price is already beyond the median analyst price target of $5.80, and sentiment is neutral to slightly bullish with five-year EPS growth of 14.88% but an astounding 66% over the next year. Granted, 2012 EPS came in at $.02 per share and Wendy’s has already earned $0.01 per share in the first quarter, but total revenues have seen a multi-year decline from $3.42 billion in 2010 to $2.51 billion in 2012.

The company is in the midst of major revamping (flat screen TVs, cozier seating, fireplaces) to most of its 6,544 restaurants expected to complete by 2015. Closings during remodeling and expenses may hit the bottom-line until then.

Take a bite of these

McDonald’s stock hasn’t performed well since 2011. With McDonald’s Corporation (NYSE:MCD) willing to sacrifice margins near-term it may stay weak, although the yield is appetizing.

Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)’s stock has soared; so despite a promising move into fast food, it should be approached with caution. Burger King Worldwide Inc (NYSE:BKW) with its growth prospects is a possible buy but you’ve been forewarned about its huge debt.

Wendy’s may be a come from behind winner here if one has a much longer term outlook, but ease in on the name on market downturns.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide, McDonald’s, and Red Robin Gourmet Burgers. The Motley Fool owns shares of McDonald’s.

The article The Best Burger (Stocks) in America originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!