McDonald’s Corporation (MCD): Poised to Take the Crown?

A second major factor in Burger King Worldwide Inc (NYSE:BKW)’s future growth will be the company’s strategy to move from company-owned restaurants to franchises. While this transition will make revenue growth look slow, earnings per share and cash flow should increase at a much faster rate. This is a similar strategy to what McDonald’s Corporation (NYSE:MCD) has been doing for many years and is part of the reason the current king of fast food is so favored by investors. Investors that understand the transition occurring at Burger King will realize that slow revenue growth is simply a function of fewer company-owned restaurants and more franchisee fees.

At present, it’s hard to argue with an investment in any of Burger King Worldwide Inc (NYSE:BKW)’s competition. McDonald’s Corporation (NYSE:MCD) and The Wendy’s Company (NASDAQ:WEN) both offer yields of at least 2.7%, and both chains are expected to report decent earnings growth of between 9% and 15% in the next few years. Yum! Brands, Inc. (NYSE:YUM) is dealing with some issues today, but with a near 2% yield and almost 12% expected growth, the stock looks okay.

One thing that investors can expect from the “new” Burger King Worldwide Inc (NYSE:BKW) is, that their better cash flow and earnings growth will lead to a better balance sheet, and potentially a better yield. If the company can deliver on the nearly 17% EPS growth analysts are calling for, the stock could sell for a king’s ransom in the next few years.

Chad Henage owns shares of McDonald’s. The Motley Fool recommends Burger King Worldwide and McDonald’s. The Motley Fool owns shares of McDonald’s.

The article Poised to Take the Crown? originally appeared on Fool.com.

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