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4-Traders Homepage  >  Equities  >  Nyse  >  McDonald's Corporation    MCD

MCDONALD'S CORPORATION (MCD)
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McDonald's Corporation : McDonald's May Same-Store Sales Growth Slows

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06/08/2012 | 02:35pm CEST

--Global same-store sales rose 3.3% in May, well below analysts' 5.2% projection

--McDonald's blames economic issues for missed expectations

--Shares down 2.8% at $85.95 premarket

McDonald's Corp.'s (MCD) global same-store sales rose a slower-than-expected 3.3% in May as economic woes such as austerity measures in Europe and slowing growth in China pressured the world's largest fast-food chain's results.

Shares were recently trading 2.8% lower at $85.95 in premarket trading as analysts were expecting a 5.2% increase in global sales from restaurants open at least 13 months, according to Consensus Metrix. After ending last year as one of the best performing stocks in the Dow Jones Industrial Average, McDonald's shares are down 12% since the beginning of the year, through Thursday's close.

McDonald's has been able to boost guest traffic and sales faster than most of its competitors with its increasingly diverse menu--ranging from value-price offerings to higher-margin products like blended-ice drinks--and its growing global operations. But the hamburger chain has previously warned the global economic climate remains challenging with varying degrees of consumer confidence, economic pressures and inflationary costs. The headwinds also contributed to the company missing April sales-growth estimates.

"Despite the increasingly challenging global economic environment," Chief Executive Jim Skinner said, "I am confident we will continue to deliver long-term sustainable growth."

Most restaurant chains are seeing their strongest growth in emerging markets like Asia, but for McDonald's, the U.S. has become its biggest growth engine, despite the fact that the restaurant industry is over-saturated and highly competitive.

Same-store sales in the U.S. rose 4.4%, missing the 5.3% growth estimate from Consensus Metrix. The company attributed its growth to the launch of its seasonal Blueberry Banana Nut Oatmeal and continuing demand for its breakfast items. But Burger King and Yum Brands Inc.'s (YUM) Taco Bell are making a comeback in the U.S., potentially posing a threat to McDonald's.

In Europe, same-store sales grew 2.9%, well below the 5.1% analyst estimate, as austerity measures offset the benefits of remodeling restaurants. McDonald's has said that it is seeing weakness in France, Germany and the U.K., as unemployment puts a damper on its sales.

The Asia/Pacific, Middle East and Africa region posted a 1.7% decrease, while analysts projected a 3.2% rise. McDonald's said positive results in Australia were more than offset by negative results in Japan as it is still recovering from last year's tsunami and, to a lesser extent, China, which is seeing its economic growth slow to 8% this year from last year's 9%.

McDonald's reported in April its first-quarter earnings rose 4.8% as sales grew slightly faster than expected, signaling the company's resilience against broader economic woes. But R.W. Baird analyst David Tarantino notes that McDonald's management's cautious tone in April regarding the second quarter, combined with negative currency movements since the start of May, suggest second-quarter earnings could fall below analysts' consensus.

McDonald's said May systemwide sales rose 1.2%, or 5.6% in constant currencies.

Write to Melodie Warner at [email protected]

Write to Annie Gasparro at [email protected]

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Financials ($)
Sales 2018 21 215 M
EBIT 2018 9 164 M
Net income 2018 6 025 M
Debt 2018 28 814 M
Yield 2018 2,49%
P/E ratio 2018 21,61
P/E ratio 2019 19,96
EV / Sales 2018 7,51x
EV / Sales 2019 7,62x
Capitalization 131 B
Chart MCDONALD'S CORPORATION
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McDonald's Corporation Technical Analysis Chart | MCD | US5801351017 | 4-Traders
Technical analysis trends MCDONALD'S CORPORATION
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TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
Sell
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Mean consensus OUTPERFORM
Number of Analysts 31
Average target price 187 $
Spread / Average Target 13%
EPS Revisions
Managers
NameTitle
Stephen J. Easterbrook President, Chief Executive Officer & Director
Enrique Hernandez Non-Executive Chairman
James R. Sappington Executive VP-Operations & Technology Systems
Kevin M. Ozan Chief Financial Officer & Executive Vice President
Robert A. Eckert Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
MCDONALD'S CORPORATION-3.29%130 701
YUM BRANDS1.24%26 704
YUM CHINA HOLDINGS INC1.75%15 721
CHIPOTLE MEXICAN GRILL59.85%12 841
DOMINO'S PIZZA, INC.49.10%11 726
WENDYS CO8.77%4 272