McDonald's Is Winning Burger Wars

Updated from 8:21 a.m. EDT

Its own house in order, McDonald's (MCD Quote) looks ready to take a bite out of the competition.

The fast food chain previewed a major third-quarter earnings beat Wednesday and boosted guidance, signaling that the turnaround plan implemented by late CEO Jim Cantalupo, who died of a heart attack in April, is taking hold. With evidence of better traction in the burger wars, McDonald's shares seem to hold the possibility of more upside.

The stock was recently trading up $1.14, of 4.1%, to $28.69. That's just over 15 times earnings estimates through December of 2005. Its competitors are more expensive by the same measure. Wendy's (WE Quote) shares cost 15.7 times estimated earnings, while Yum! Brands (YUM Quote), which owns Taco Bell, Pizza Hut and KFC, fetches 16.2 times estimates. ...