With shares of McDonald’s Corp (NYSE:MCD) trading at around $93.48, is MCD an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
McDonald’s same-store sales were up 0.01 percent. That isn’t usually anything to get excited about, but it well-received because it was a marked improvement from the negative same-store sales fast-food chain reported in October. Investors care about direction more than actual results, and the direction was good.
On the other hand, management isn’t confident about January’s same-store sales. That number is expected to be negative. This might hurt the stock price a little, but since the expectation is already out there, it won’t be a significant event unless it’s a huge downside surprise.
Same-store sales for the year were up 3.1 percent. McDonald’s also just beat expectations with an EPS of $1.38, but not many people cared. Once again, investors want to know about direction.
If you really listen to what McDonald’s has been saying, it’s that they’re setting up for the future by making new moves to gain market share, but the near-term is going to be rough. McDonald’s sees ongoing volatility due to weak consumer spending. McDonald’s also expects fast food dining to be flat at best in the near future.
McDonald’s has three primary goals at the moment, which are to optimize the menu, modernize the customer experience, and broaden the McDonald’s brand around the world. In most cases, these types of goals in a weak environment would sound like nothing more than management crooning to investors that everything is going to be okay. However, with McDonald’s, these are realistic goals that will likely be attained.
If you enjoy eating at McDonald’s, then you might like to know that Fish McBites, beef sandwiches, and chicken entrees will be coming to the menu in 2013.
Now let’s take a look at some important numbers for McDonald’s…