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Burger King Issues 1Q13 Guidance

Zacks Equity Research

Miami, FL-based hamburger restaurant chain Burger King Worldwide, Inc. (BKW) recently provided guidance for the first quarter of 2013.

Burger King projects that adjusted earnings will grow nearly 25% year on year to 17 cents per share in the first-quarter 2013, higher by a cent than The Zacks Consensus Estimate.

Burger King also expects that sluggish economic condition will cause its comparable restaurant sales (comps) to drop 1.5% during the quarter. In addition, regionally, Burger King is expected to witness a 3% decline in its comps  in the U.S. and Canada.

Apart from the persistent global economic turmoil, peer pressure and tough year-over-year comparisons led to the comps decline in both the regions. However, in March, comps in the U.S. and Canada registered a positive growth on the back of the company’s value offerings.

Burger King is focused on managing its capital efficiently. As of Dec 31, 2012, Burger King had $546.7 million of consolidated cash and cash equivalents. We believe that the company has adequate cash to provide optimum shareholder value.

Hence, Burger King announced the approval of a new stock repurchase program worth $200 million of its common stock. This share buyback, which is to be conducted before May 31, 2016, will be done through an open market repurchase agreement.

In addition, Burger King recently announced a 20% hike in its quarterly cash dividend rate. The company will now pay a dividend of 6 cents per share for first-quarter 2013, up a penny from the prior-quarter dividend.

The increased dividend will be paid on May 15, 2013 to stockholders of record on May 1, 2013. The accretion from share buybacks and increment in dividend is likely to inspire investors’ confidence in the stock.

During the fourth quarter of 2012, Burger King posted adjusted earnings of 23 cents per share, up 58.8% year on year. However, total revenues were down 30.3% year over year to $404.5 million owing to refranchising and negative currency translation.

Burger King currently retains a Zacks Rank #2 (Buy). Another restaurateur Chuy's Holdings, Inc. (CHUY) recently declared its preliminary first-quarter 2013 sales results. According to the results, net revenues inched up 24.5% year on year to $46.7 million and comps spiked 2.3% year over year.

Other restaurateurs, which are expected to perform well, include Red Robin Gourmet Burgers Inc. (RRGB) and Cracker Barrel (CBRL), both carrying a Zacks Rank #1 (Strong Buy).

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Read the Full Research Report on CHUY

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