Update McDonald’s (MCD)
Ronald McDonald delivered a big surprise this morning.
McDonald’s announced fourth quarter earnings of $1.11 a share before the market opened on January 22. That was 9 cents a share better than Wall Street had expected. In the fourth quarter of 2008 the company earned 87 cents a share. Revenue climbed 7.3% from the fourth quarter of 2008 to $5.97 billion. That too was above the Wall Street consensus (at $5.94 billion.)
But the biggest surprise came on global comparable store sales There the company reported an increase of 2.3%. Wall Street had been expecting comparable store sales to fall by 0.03%. Comparable store sales growth was, however, lower than last quarter’s 3.8% increase.
Europe was the star, Asia was a disappointment, and the United States was the big surprise when it came to regional comparable store sales.
Longer hours and refreshed restaurants in Europe added up to a 4.8% climb in comparable store sales for the quarter. Analysts had projected 4.3% growth.
In Asia, the Middle East, and Africa comparable store sales increased 1.5% but that was well below the 2.4% growth projected by Wall Street. McDonald’s is still struggling in China where, despite the economic recovery represented by 10.7% GDP growth in the fourth quarter, many Chinese are still worried about their personal economy and are opting to save money to eating at cheaper local alternatives to McDonald’s.
In the United States, the toughest market for any restaurant company over the last year, McDonald’s addition of free Internet access and its $1 breakfast menu managed to earn the company a 0.1% increase in comparable store sales for the quarter. Analysts were expecting that U.S. comparable store sales would fall by 0.6%.
As of January 22, 2010 I’m leaving my target price at $72 a share by September 2010. On January 22 the stock was paying a 3.4% dividend yield.
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Jim,
Is a potential 16% total return for the year a current Value Meal?
Last time I was in China (long time ago), having dinner at Mc Do’s was an expensive experience for locals.