Burger King: Decent Q3, but Sector Concerns Persist

Otherwise, the problematic restaurant revenue trend continued at BKC. Worldwide, same store sales declined 3.7% in the third quarter, including a 6.7% decline in the large U.S./Canada market. Worldwide restaurant margins dipped to 11.3% from 11.7% a year ago.

Overall, third quarter revenue fell 0.5% to $596.9 million compared to the First Call estimate of $598.1 million.

Burger King cited the persistence of "a very challenging macroeconomic environment" as one reason sales remain sluggish. High U.S. unemployment/underemployment levels have removed a portion of Burger King's traffic.

Stock Analysis: After controlling for the idiosyncratic winter weather element, Burger King posted a modest quarter, but the long-term narrative remains the same. The U.S. market has too many fast-food restaurant chains given the 'frugal consumer' era and the shift toward healthier foods. That points to sector consolidation and it remains an open question whether Burger King can offer a unique, value-oriented hamburger experience to propel restaurant traffic significantly higher. The calculation here argues BKC will not be able to, hence I'd avoid the shares.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.