Filed under: Company News, Apple, McDonald’s, Earnings, Investing
There were plenty of winners and losers this week, with a burger chain making a fiscally shrewd deal for a Canadian icon and a once-trendy retailer suffering another quarter of declining sales at the store level. Here’s a rundown of the week’s smartest moves and biggest blunders.
Burger King (BKW) — Winner
Shares of Burger King moved higher after the company announced that it would acquire Canadian doughnut shop Tim Hortons (THI). Companies announcing acquisitions usually see their stocks go down — not up — but investors got excited about the prospects of Burger King’s profits expanding if it’s able to approach this deal as a controversial inversion in which its corporate home would shift from Florida to Canada.
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Corporate inversions have become a hotly contested issue after two drug giants executed inversions to slash their tax bills by moving to Europe this summer, but they have also alerted politicians to the downside of the country’s high corporate tax rates relative to those of other developed nations. President Obama is calling these inversions a lack of “economic patriotism,” but investors seem to be siding with the prospects of chunkier after-tax profits.
McDonald’s (MCD) — Loser
Not every fast-food chain was rocking this week. Russia forced the world’s largest burger chain to temporarily close a handful of its restaurants earlier this month on sanitation concerns. This week another three McDonald’s were told to shut down for 90 days.
McDonald’s can’t seem to catch a break closer to home, and now it’s struggling to keep its eateries open in Russia? Some say that the sanitation accusations are bogus, arguing that Russia is merely targeting the iconic Americana giant as rhetoric heats up between the U.S. and Russia. Either way, McDonald’s can’t win. If the sanitation fears hold up, McDonald’s is going to take a hit in the country. If it’s a pawn in a game of government sanctions, the impact could last longer than these 90-day closures.
Sirius XM Radio (SIRI) — Winner
The combination of Sirius and XM six years ago created a monopoly in satellite radio, but this doesn’t mean that everybody with a Sirius or XM receiver is a subscriber. In fact, just 26.3 million of the estimated 65 million cars with satellite receivers are active subscribers. Sirius XM’s stunt to get more of those inactive drivers on board is to give them two free weeks of limited content.
Sirius XM activated all of the nearly 39 million dormant receivers on Tuesday. Listeners have access to 60 of the service’s channels for two weeks with no strings attached. It’s a brilliant move because it doesn’t cost Sirius XM anything to temporarily activate its receivers. It’s a high upside move with minimal cost.
Abercrombie & Fitch (ANF) — Loser
Retailers made up many of the earnings reports this week, and one of the weaker performances came from Abercrombie & Fitch. The once-trendy mall retailer known for stirring up controversy and using scantily clad models slipped after posting disappointing financials.
Sales dropped by a larger-than-expected 7 percent, weighed down by an 11 percent plunge in comparable-store sales. Optimists will argue that Abercrombie’s adjusted earnings managed to move higher in this climate, contrasting with expectations for a dip. However, it’s hard to get excited about a retailer when customers are shopping somewhere else.
Apple (AAPL) — Winner
The world’s largest consumer tech company made it official: Sept. 9 is when it will introduce the new iPhone. Chatter surrounding that particular date as designated for Apple’s media event surfaced earlier this month, but then reports claimed that supplier shortages of key components would force Apple into delaying the release of its next smartphone.
“We wish we could say more,” reads the Apple media invite. On Sept. 9 it most definitely will say more. The stock went on to hit a new all-time high on Thursday.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, Burger King Worldwide, and McDonald’s. The Motley Fool owns shares of Apple and Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days.
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Source: Investing
