Analysis on Burger King Worldwide Inc
Burger King (BKW) is the second largest fast food hamburger chain in the world which was founded in 1954; it operates in over 12,600 locations serving over 11 million customers daily in 83 countries and territories worldwide. About 95 percent of Burger King Restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. This company became a publically traded company in this year June 20 2012. Therefore, only current year data will be presented in this report.
In general, a high Price Earnings Ratio recommends that investors expect higher earnings growth in the future relative to companies …show more content…
It is used in regression analysis and for the capital asset pricing model (CAPM). As displayed by the graphs above, it demonstrates how asset’s performances are sensitive to systematic risk. The company is the youngest publically traded company. Thus, time period presented is less than year. BKW has low value of R-squared, which is 0.062 and it means that much of the total risk is specific risk. The number close to 1 is higher R^2 than number close to 0. The R- squared of 0.062 suggests that 6.2 percent of the risk in BKW from market sources, and the balance of 73.8% of the risk come from corporation specific components. Thus, it should not attract a higher expected return. Using historical data we obtained from linear regression. As presented by the graph above, BKW has higher beta than those in the similar industry sectors, which is 0.652. Basically, beta forecasts how much investor can expect a fund's returns to a gain or loss of its benchmark. With a larger beta, investors should expect greater returns. BKW has a positive alpha which implies that fund returns will be higher than expected given beta. BKW has high values in beta and alpha. Which are 0.652 and 0.092, respectively. Thus, investors possibly expect high return of funds. Overall, from the regression graph presented, greater variability is associated with higher risk, while high returns may be obtained from stocks with high beta shares. The graphs above show that BKW risk premium is