McDonald’s Corporation (MCD), The Wendy’s Co (WEN): Fast Food Takes a Beating

Buy or bypass burger stocks?

Of these, Burger King Worldwide Inc (NYSE:BKW) has been the outperformer since it IPO’d last summer, up more than 50% from its low of $12.91. It is the third largest fast food hamburger chain globally behind McDonald’s and Wendy’s. Its trailing P/E is a Whopper sized 49.26 with a 1.30% yield. The short interest has decreased from 14% in April to 11% in May.

As for The Wendy’s Co (NASDAQ:WEN), it reported its Q1 results on May 8 and they were only ho-hum with reiterated guidance on EBITDA and only slightly higher EPS outlook due to refinancing benefits. On the bright side, CFO Steve Hare commented,”The 2013 refinancing and recent dividend increase are important elements of our financial management strategy, and dividends will continue to be part of our commitment to improve total shareholder returns.”

One of The Wendy’s Co (NASDAQ:WEN) franchisees is aiming to turn around its fortunes by hiring better employees as reported by Forbes. At least, that’s one possible solution to this disturbing prank trend.

The Wendy’s Co (NASDAQ:WEN) has a forward P/E of 25.35 and a yield of 2.70%. Compared with McDonald’s Corporation (NYSE:MCD) trailing P/E of only 18.24, forward P/E of 15.76, and 3.20% yield, Wendy’s story isn’t that appealing, either. It should be noted that McDonald’s Corporation (NYSE:MCD) is a Dividend Aristocrat, having consistently raised the dividend for over 25 years.

A fast food Foolish takeaway

These kinds of incidents aren’t new to the restaurant industry. What is new is that they are so quickly disseminated to the public. And that’s a good thing, even if disgusting. The fast food industry is hyper-aware of food safety issues since the Jack in the Box debacle.

As quick as companies are to respond, damage control is more difficult than ever and headline risk will continue to be an issue. If you still believe that long-term, fast food is a part of our global culture that isn’t going away then McDonald’s is really your best choice.

The article Fast Food Takes a Beating originally appeared on Fool.com and is written by AnnaLisa Kraft.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide and McDonald’s. The Motley Fool owns shares of McDonald’s. AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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