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Burger King Profits Sizzle

Burger King Holdings (BKC) on Nov. 1 announced a whopping 82% surge in quarterly profit and 7% gain in revenue, boosted amid factors such as tax changes and growing sales.

The Miami restaurant chain's net income during the three month period ended Sept. 30 increased 82% to $40 million, or 30 cents per diluted share, from $22 million, or 19 cents per share in the same period last year. Revenue rose to $546 million, a 7% gain from the 2005 quarter.

Recent results reflect tax-related benefits, after the company realigned its European and Asian businesses effective July 1.

"Our BK Stacker [sandwich], introduced in North America in July, continues to exceed our expectations, and our BK Value Menu is growing both revenue and bottom-line profitability," said Burger King CEO John W. Chidsey in a press release.

The company's system-wide average restaurant sales (ARS) increased 5% to $300,000 during the first quarter of fiscal 2007 as compared to $287,000 in the same quarter last year.

Since Burger King's initial public offering in May 2006, it has paid off $435 million in debt, a 30% reduction in the total. During the third quarter it retired $50 million in debt, using cash generated from operations.

The stock surged 7.3% to $18 per share in afternoon trading on the New York Stock Exchange.

JP Morgan analysts were positve on the quarter, calling the company's results a "clean beat" of their expectations for EPS, comparable-store sales, and company restaurant margins in a Nov. 1 research note. "In all, momentum appears to be solid and the company continues to utilize its free cash flow by paying down debt", they note. The firm continue to rate Burger King shares "Overweight."

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