Burger King Holdings (BKC) stock has not had a very inspiring run over the last 18 months or so. While the broader stock market has come roaring back from the March 2009 lows, BKC stock is essentially flat as Burger King has struggled to connect with consumers.

In the fast-food wars, last quarter the big winner was McDonald’s (MCD). An increase in same-store sales and strong McDonald’s earnings were evidence of this. And this quarter the big loser is Burger King Holdings. Judging by its latest fiscal results investors may want to step away from the company’s table. See related article – 5 Reasons to Buy McDonald’s MCD Stock.

Here are five reasons why selling Burger King stock may be the best move for your portfolio:

• BKC stock earnings were poor. On April 29, Burger King reported fiscal third-quarter earnings results showing profits sank 13% year-over-year.  Burger King said it earned a profit of $41 million, or 30 cents a share in the quarter. BKC earnings were from $47 million or 34 cents a year earlier. Burger King sales revenue also was down in the quarter.  Although the bottom-line number of 30 cents per share was a penny above the consensus estimate, revenue of $596.9 million fell short of the $598 million analysts predicted.
• Burger King same store sales declining. The decline in profits and revenues came courtesy of a sharp drop in the all-important same-store sales metric, a measure of sales at locations open at least one year.  Burger King’s same-store sales fell 3.7% in fiscal Q3, with very sharp declines in January and February in restaurants located in the U.S. and Canada.  The results improved in March, but not enough to keep same-store sales out of the red for the quarter.  In fact, North American same-store sales sank 6.1%.
• BKC stock leaders blame the weather? The company attributed the same-store sales decline in North America to what it called the “severe U.S. weather conditions in January and February.”  And while it’s true that those strong winter storms kept restaurant goers at home, the harsh weather didn’t stop rival McDonald’s from adding to their U.S. same-store sales during the same period.
• Burger King also blaming unemployment. Another reason cited by Burger King for the weak quarterly same-store sales and revenue was “high levels of unemployment and underemployment.” According to Burger King CEO John Chidsey, the unemployment problem “will remain our industry’s biggest headwind.”  While high unemployment may indeed be a headwind for the economy at large going forward, the employment picture didn’t stop rival McDonald’s stock from enjoying a blowout quarter or holding back MCD earnings.
• BKC stock is overextended. Over the past three months, BKC shares have surged nearly 23%.  However, right after reporting fiscal Q3 earnings, the stock has sold off sharply.  With such a solid run higher in the stock leading up to earnings, and given the aforementioned decline in revenue and same-store sales, investors now are voting with their pocketbooks and making their way for Burger King’s exits.

If you’re looking for a stock to buy in the fast-food space, then “The King” is not your best choice. 

As of this writing, Jim Woods did not own a position in Burger King.

Tell us what you think here.

Related Articles:

• Burger King Banks on Brunch – MCD, BKC, JACK, WEN, YUM, DENN
• Can SBUX Coffee Perk Up Burger King breakfast?
• Fast-Food Restaurant Stocks Watching Sonic Servers on Skates (SONC, BKC, WEN, YUM, MCD)