Update McDonald’s (MCD)
What you want to do about McDonald’s (MCD) in the short run—say, the next six months or so—depends on how optimistic you are about the economy and the stock markets. The more optimistic you are, the less reason you have to hold McDonald’s. The more you believe that the stock market might stall or correct slightly over the summer, and the more you’re worried about economic growth slowing (but not stopping) in the second half, the more you’ll want to hang onto your position.
I fall, frankly, into the more pessimistic second camp. So I’m going to keep these shares in Jubak’s Picks. The company’s first quarter earnings, announced on April 21, make the decision to stay on board much easier.
The story in the company’s first quarter earnings was simple: Growth in the U.S. is back. Read more
The dollar turns from earnings headwind to tailwind in the fourth quarter
The weak dollar will finally start showing up as a plus in company earnings in the fourth quarter.
It’s been one of the puzzles of recent quarters how a falling dollar could hurt earnings at U.S. companies with big overseas sales such as McDonald’s (MCD), PepsiCo (PEP), and Proctor & Gamble (PG). In the third quarter each of these companies has noted that “currency effects” had resulted in hits to reported revenue of five, six, seven, or more cents per share.
So what’s going on? A weaker U.S. dollar is supposed to help the reported revenue and earnings for companies like these. When sales in Euros or baht or yen are translated back into dollars, a weak dollar turns them into more dollars. Read more
Update McDonald’s (MCD)
Now that’s the kind of quarter investors own McDonald’s (MCD) for.
Earnings for the third quarter, reported before the market open on October 22, climbed to $1.15 a share from $1.05 in the third quarter of 2008. That was above Wall Street expectations of $1.11 a share. (This puts McDonald’s among the 80% of so of Standard & Poor’s 500 stocks that have beat Wall Street estimates so far this quarter. For more on that see my October 20 post http://jubakpicks.com/2009/10/20/companies-beat-wall-street-earnings-estimates-at-a-record-pace-so-far-this-quarter/ )
Revenue fell 3.5% to $6.05 billion. That was below analyst projections of $6.1 billion. But on a constant currency basis revenue was up 2% from the third quarter of 2008.
Same store sales increased by 3.8% over all and they were up in every region where McDonald’s does business. And by more than Wall Street had projected, according to Bloomberg. Same store sales grew by 2.5% in the United States (analysts had expected 2.2% growth), by 5.8% in Europe (5.4% expected), and by 2.2% in Asia/Pacific, Middle East and Africa (1.1% expected). Read more
Update McDonald’s (MCD)
In the Great Recession restaurants in almost all categories continue to struggle. Almost all. McDonald’s (MCD) continues to prove that when times are tough, value counts with consumers.
On August 10, McDonald’s said that global same-store sales rose 4.3% in July. The strongest growth came from Europe, where same store sales climbed 7.2% over July 2008. But same store sales climbed even in theUnitd Stats where they gained 2.6% from July 2008. The roll out of the company’s new McCafe coffee drink line was a key driver of sales increases in the U.S.market. Read more
Update McDonald’s (MCD)
I can give you the negatives in McDonald’s (MCD) second quarter earnings report in two words: stronge dollar.
A rising U.S. currency cuts into McDonald’s revenue and earnings when local currencies–which is how people in Russia, India, and France pay for their fries–are translated back into dollars-which is how McDonald’s reports its results.
For the quarter, reported on July 23, the company saw global same store sales climb by 4.8% but total revenue fell by 7%.
The good news for next quarter and beyond is that the company is projecting less damage from the dollar and more growth from the roll out of new products such as the McCafe coffee drinks line and the new Angus burger. I’m going to keep my target price at its current level but I’m going to move out the schedule for achieving it just a bit. Read more
