So, clearly, we can see that McDonald's and Wendy's are not just resting on the laurels. While McDonald's is seeking to expand its international footprint, Wendy's is seeking to cut costs and re-brand. Which one is more undervalued? In my view, McDonald's is the much more preferable of the two investments. It trades at 15.1x forward earnings versus 25.9x for Wendy's. The latter is just starting to enter the profitable territory, but it's, in my view, too shaky of an investment to buy over McDonald's, which will experience a more predictable 9% annual growth rate over the next five years.
The article Should You Buy McDonald's or This Stock Instead? originally appeared on Fool.com and is written by David Gould.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.