The fall-off of Facebook shares can be traced to a number of things — whether or not they are legitimate. The first is that a some traders believe Morgan Stanley (NYSE: MS) and Facebook decided, at the last minute, to flood the market with stock to raise more money for the social network. There is a rumor that Morgan Stanley cut Facebook revenue forecasts right before the IPO. Major trading issues in the Nasdaq (NASDAQ: NDAQ) system, which delayed orders and rattled investors, might have been another cause. Two days before the IPO, General Motors (NYSE: GM) pulled its ads from Facebook. That seemed to be a bit of revenge, although no one can figure out why. And, perhaps most damaging, analysts attacked Facebook’s inability to make money on its mobile presence, which raised the question of its long-term viability as a growth company.

Zynga faced none of these problems. Its only trouble was being tethered to Facebook because it gets so much revenue from the social network. Facebook’s mobile strategy eventually could effect Zynga, but the balance of the long list of reasons Facebook shares declined really do not apply to the game firm. Zynga‘s shares may have fallen consistently since mid-April, but Wall St. had begun to warm to the company after its recent, better-than-expected earnings. Citigroup (NYSE: C) started coverage of the game firm with a “buy” and a $12 price target.

The Zynga share drop is no different from the reaction traders have when they sell Ford (NYSE: F) because of poor GM earnings, or drop Yum! Brands (NYSE: YUM) when McDonald’s (NYSE: MCD) announces poor earnings. As often as not, two companies in a related sector have very different financial results, for good reasons most of the time. GM has strong sales in China; Ford does not. Yum!’s operations in the U.S. do poorly; America is a stronghold for McDonald’s. Pairings like Walmart (NYSE: WMT) and Target (NYSE: TGT) or Lowe’s (NYSE: LOW) and Home Depot (NYSE: HD) are often not pairs at all. If they really were parallel in almost every way, management skills would make no difference to results.

Zynga and Facebook may trade as a pair, but they are not one.

Douglas A. McIntyre

Competitors McDonald’s Corp. (NYSE: MCD), Yum! Brands Inc. (NYSE: YUM), and Chipotle Mexican Grill Inc. (NYSE: CMG) have already reported quarterly results, with Yum and Chipotle Mexican Grill raising their outlooks rather than lowering them. Jack in the Box Inc. (NASDAQ: JACK), which reports later this month, is expected to post higher profit on slightly lower sales.

Wendy’s saw its margins drop from 13.4% a year ago to 11.8% this year, “due primarily to the impact from higher commodity costs — especially for fresh beef — and the impact from unfavorable product mix.” Commodity costs are what they are, and every restaurant faces the same issue, but having the wrong products is a management issue.

The company plans to fix that by remodeling its stores:

We are allocating substantial resources toward restaurant development, marketing, product innovation and customer service initiatives that we believe will ultimately accelerate sales growth, enhance the quality of our store base and grow our worldwide presence over time.

The key word there is “ultimately.” Will investors give the company the time it will need to make all those changes? And will the changes actually deliver on the promises?

The company closed a net 13 stores in the first quarter, bringing its worldwide total of locations to 6,581, only 354 of which are outside North America. Wendy’s also said that it “continues to target more than 8,000 locations outside North America.” The question is whether or not the company waited too long to look for growth overseas.

In the pre-market this morning, Wendy’s shares are down about -2.5% at $4.75 in a 52-week range of $4.29-$5.62.

Paul Ausick

There is a larger question to ask outside of what may be a domestic growth story and what lies beyond the retirement of its super-star CEO James Skinner.  What about that Latin American version of McDonald’s?  This is where Arcos Dorados Holdings Inc. (NYSE: ARCO) comes into play.  The name translates from Spanish to “Golden Arches” in English.

This stock was already falling this week but the stock is literally getting gutted to a post-IPO low after its earnings report. As of the end of 2011 it operated or franchised some 1,840 McDonald’s-branded restaurants with over 90,000 employees serving approximately 4.3 million customers a day.  You can argue that the weak U.S. jobs data might translate to more weakness in Latin America, but many of the key growth markets in Latin America were already seeing slower growth on their own ahead of the U.S. economic data weakening.

Arcos Dorados reported earnings Friday and showed that first quarter revenues gained 11.5% to $921.6 million but that would have been up 16.6% on a constant currency basis.  The company said that its systemwide comparable sales growth was 11.6%.  Net income fell 28.4% to $25.4 million, due to higher depreciation expense, higher capital spending, higher foreign exchange losses, along with higher tax charges, and lower gains from the sale of property and equipment.

Cash and cash equivalents were $144.3 million and its total financial debt was $540.1 million as of March 31, 2012.  Arcos Dorados added 86 restaurants during the last 12-month period.  It was last month that the company decided to initiate a dividend and that payment would currently come to about 1.6% now that the share price is under $15.00.

The prior post-IPO range was $16.79 to $29.43 and now the stock is down over 50% from its highs.  As of mid-Friday the stock is down about 18% at $14.00 with volume already running over 200% above normal with some 5.1 million shares traded.

Today’s reaction in Arcos Dorados is very confusing on the surface.  This was one super-hot IPO in 2011.  The IPO came out at $17.00 per share, well above the expected range of $13.00 to $15.00 per share and this stock rose more than $4.00 on its debut to only eventually go up to above $29.00 at the peak.  The sell-off sure feels like something worse than beating revenues but missing on earnings is at work.

Yum! Brands, Inc. (NYSE: YUM) has also been soft and the 1.5% drop today to $70.90 is down from an all-time of $74.44.  Yum! has its growth story tied more to China than Latin America.

You might not know that the DJIA was recently at year highs for 2012.  This is one of those days where even the defensive stocks are not holding up well.  Why is “Sell in May and go away!” ringing such a strong bell right now?

JON C. OGG

Good Times has a market cap of less than $13 million, even at today’s nosebleed prices. It is competing for dining out dollars with behemoths like McDonald’s Corp. (NYSE: MCD), Yum! Brands Inc. (NYSE: YUM), Starbucks Corp. (NASDAQ: SBUX), and current darling Chipotle Mexican Grill Inc. (NYSE: CMG). Even mid-size eateries like Darden Restaurants Inc. (NYSE: DRI) and Sonic Corp. (NASDAQ: SONC) dwarf Good Times and its 45 locations, all but 4 of which are in Colorado.

In its latest annual report, Good Times noted that it sold one of its stores in exchange for modifications to its credit agreement. The company went through a 1-for-3 stock split in December 2010 and closed 3 more stores in 2011 in addition to the one it sold.

Good Times might be a fine place to eat, but a fine place to invest? Without the 4x bump in share price over the last week, the entire enterprise would be worth about $3 million.

With just over an hour to go in today’s trading session, Good Times shares are up 66.9% at $4.69 after posting a new intra-day high of $5.98. The 52-week low is $0.71. Remember that last figure.

Paul Ausick

Excluding currency effects McDonald’s total sales rose 7% in the quarter, identical with growth in total sales at Yum! Brands Inc. (NYSE: YUM), which reported earnings on Wednesday. Starbucks Corp. (NASDAQ: SBUX) reports earnings next week and is expected to post revenues of $3.18 billion, a jump of 14% over the same period a year ago.

Overall, McDonald’s posted EPS of $1.23, right in line with the consensus estimate, on revenue of $6.55 billion, slightly ahead of the consensus estimate of $6.54 billion. The EPS estimate for next quarter is $1.44 on revenues of $7.15 billion. Good weather is not likely to offer much of boost in the current quarter, so the company better have something else up its sleeve.

McDonald’s shares are up about 1.7% in the pre-market at $96.95, in a 52-week range of $76.50-$102.22.

Paul Ausick

First-Quarter Earnings

Companies will begin to release first quarter results this week. S&P says it expects a sharp slowdown in earnings improvements among the S&P 500. This, in turn, could knock the stock market advance off its axis. It may not take much. The S&P 500 is up nearly 10% over the past three months. New concerns about the economy began last week as the jobs report for March was worse than expected. High gasoline and oil prices are the subject of everyday conversations by analysis and economists. Earnings may be the last weight on the pile. It appears the advance of the markets may be over.

iPhone 5 Rumors

There is more speculation about the release of the new Apple (NASDAQ: AAPL) iPhone 5 than about who will win the presidential election. Both could be settled at about the same time. Companies that do business with huge Apple supplier Foxconn claim the launch of the iPhone 5 will be in June or July. Other predictions put it a quarter later. The real question about the launch is what Apple will add to a product that already has record demand. If the new iPad is any indication, the iPhone 5 will have a stronger processor, the ability to work on superfast 4G networks and better screen resolution. It will need at least those things to distinguish it from the hot-selling iPhone 4S.

A Bloomin’ IPO

Bloomin’ Brands, the owner of Outback Steakhouse, will try to raise $300 million through an initial public offering. The deal may succeed, although the company’s other brands — Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse & Wine Bar and Roy’s Hawaiian Fusion Cuisine — are hardly known. Much larger competitor Burger King will set an IPO date soon. McDonald’s (NYSE: MCD) has been on a run of record results and stock buybacks. Results from KFC locations in China have driven shares of Yum! Brands (NYSE: YUM) to new highs. If Bloomin’ Brands plans to exploit the markets, there cannot be a better time.

Douglas A. McIntyre

But, much larger competitor Burger King will set an IPO date soon. McDonald’s (NYSE: MCD) has been on a run of record results and stock buybacks. Results from KFC locations in China have driven shares of Yum! (NYSE: YUM) to new highs. If Bloomin’ Brands plans to exploit the markets, there cannot be a better time.

The new IPO season may not be as dominated by tech as was the one in the first quarters

Burger King will come public through a complex series of transactions. According to the AP:

[T]he New York-based investment firm 3G Capital said it is selling a 29 percent stake in Burger King for $1.4 billion in cash to Justice Holdings Ltd., a London-based shell specifically set up to invest in another company. 3G Capital will keep the remaining 71 percent. Justice Holding’s shares will suspend trading on the London Stock Exchange once the deal is complete. It will then emerge as Burger King Worldwide Inc. and its shares will be traded on the New York Stock Exchange.

Analysts who cover the fast-food industry report that Burger King has lost ground to firms such as Subway and Yum!’s divisions, which include KFC. But a company in third or fourth place is apparently valuable in one of the great global growth industries.

McDonald’s trades near an all-time high and has a market cap of more than $100 billion. It has returned billions of dollars to shareholders recently through dividends and stock buybacks. The firm, which has more than 35,000 locations worldwide, made $5.5 billion last year on $27 billion in sales. Each number is up sharply from 2010, which was up sharply from 2009.

Yum! Brands is a smaller operation than McDonald’s but the tremendous growth of its KFC business in China has made its shares immensely attractive to shareholders. Yum!’s stock has risen nearly 80% over the past two years. Sales increased last year to $12.6 billion and net revenue also was up to $1.3 billion. The market cap of Yum! Brands is $33 billion, and its stock shows no sign of flagging.

Burger King has picked a window for its new publicly traded status, and the decision could hardly happen at a move auspicious moment.

Douglas A. McIntyre

Read The Fast-Food Chains With the Most Unhealthy Customers

Customers of four of the eight largest fast-food restaurants report a higher rate of being either totally unhappy or somewhat unhappy with their health than the general population. Not surprisingly, the fast-food diners who are most unhappy with their health also report other relatively unhealthy habits. Customers of three of the four restaurants also report among the lowest rates of exercising regularly among all major fast-food chains. McDonald’s, whose customers are the most unhappy with their health, has the lowest rate customers who exercise regularly.

The four restaurants with the most-unhealthy customers also have the lowest rates of customers who watch their caloric intake. Three have among the lowest rates of customers watching their fat intakes. This behavior does not mix well with a diet that includes a number of fast-food meals.

However, not all fast-food restaurants have unhealthy customers. Chains where customers exhibit healthier behaviors, such as Arby’s, Chick-fil-A and Subway, have customers with above-average levels of happiness with their health. As Consumer Insights Director Pamela Goodfellow told 24/7 Wall St., “The difference between these consumer groups lies in what they do beyond the drive-thru: exercising, counting their calories, focusing on fat intake and watching their health in general.”

These are the fast-food chains with the most unhealthy customers.

Gas at $3.88

Gasoline prices rose again yesterday, according to the AAA Fuel Gauge report. The price for a gallon of regular reached $3.881, up from $3.864 the day before and $3.570 one month ago. In some of the largest states by population, the price is much higher — $4.345 in California and $4.038 in New York. News about a possible release of oil from the Strategic Petroleum Reserve has not brought down the price of either crude or gasoline. Neither has news that Saudi Arabia will release additional supply. Concerns about a loss of refinery capacity on the East Coast and trouble that might close the Strait of Hormuz continue to pressure prices higher.

European PMI Falls

Europe continues its fall into a new recession. Research firm Markit has reported about March. This morning it announced:

The Markit Eurozone PMI Composite Output Index fell from 49.3 in February to a three-month low of 48.7 in March, according to the preliminary “flash” reading, which is based on around 85% of usual monthly replies. The latest reading signals a contraction in business activity for the second successive month, and the sixth decline in the past seven months.

The news was not much better for the region’s two largest economies:

At 51.4 in March, down from 53.2 in February, the seasonally adjusted Markit Flash Germany Composite Output Index indicated only a marginal expansion of private sector business activity. Output growth has now been recorded for four months in a row, but the latest rise was the weakest since December 2011 and slower than the long-run survey average.

And:

Latest Flash PMI data signalled a decline in French private sector output for the first time in four months during March. The Markit Flash France Composite Output Index, based on around 85% of normal monthly survey replies, recorded 49.0, down from 50.2 in February.

The area recession that so many economists feared has arrived.

iPad Sales Continue

News about overheating and battery problems with the new Apple (NASDAQ: AAPL) iPad have not dampened demand for its stock. Since the revelations, shares have moved from a low of $590 on Monday to a high of nearly $610 yesterday — just shy of the all-time peak. Analysts expect that Apple will sell has many as 12 million of the new iPads in the current quarter. iPhone 4S sales show no sign of slackening. And Apple is expected to release the new iPhone 5 with 4G LTE capacity later this year. That should cause another surge in revenue.

Airline Industry Teeters

The International Air Transport Association released numbers yesterday that showed it expects profits among its member airlines and air cargo carriers to drop sharply this year compared to its previous forecasts. That is, in part, the association says, due to high oil prices. Along with that, problems with the EU economy could dampen passenger and cargo demand. Management at Emirates, one of the world’s largest carriers, painted an even more bleak picture. In an interview with Bloomberg, Tim Clark, the CEO of the Dubai-based airline, said, “We can reel off a whole load of airlines that are teetering on the brink or are really gone. Roll this forward to Christmas, another eight or nine months, and we’re going to see this industry in serious trouble.”

Douglas A. McIntyre