With a deal in place to acquire Burger King (NYSE: BKC) for a tidy $24 a share, investors are handed the opportunity to quickly assess how its rivals are valued. Any rivals selling at a sharp discount to Burger King’s price are likely to see renewed investor interest as the M&A action heats up in the sector. [Read: How Investors Should Handle the M&A Frenzy] Private equity (PE) firms like to buy underperforming companies. In recent years, Burger King has seen McDonald’s (NYSE: MCD) and Yum Brands (NYSE: YUM) pull away in terms of… Read More
With a deal in place to acquire Burger King (NYSE: BKC) for a tidy $24 a share, investors are handed the opportunity to quickly assess how its rivals are valued. Any rivals selling at a sharp discount to Burger King’s price are likely to see renewed investor interest as the M&A action heats up in the sector. [Read: How Investors Should Handle the M&A Frenzy] Private equity (PE) firms like to buy underperforming companies. In recent years, Burger King has seen McDonald’s (NYSE: MCD) and Yum Brands (NYSE: YUM) pull away in terms of same-store sales growth and sharply rising cash flow. Those companies are likely too large and too healthy to be of real interest to these turnaround specialists. For that matter, Chipotle Mexican Grill (NYSE: CMG) is far too healthy — and richly valued — to hold any appeal. [More on Chipotle — and why you should short it] So I decided to take a look at three major chains that are underperforming and have major room for improvement. A fair deal… Read More