McDonald's (MCD) will beat expectations as September sales grow 11.5%
I remember the last time I had a burger at a McDonald's Corp. (NYSE: MCD) restaurant. It was two and a half years ago and I just couldn't stomach it. After the first bite, it went into the garbage with me feeling utterly nauseous. Yet, even I, a person who purports to eat healthy, don't boycott McDonald's altogether. While I had the last McDonald's burger on that fateful day, I came back for breakfasts, the salads and even the coffee. Indeed, I am not embarrassed to admit that I prefer it to Starbucks' (NASDAQ: SBUX) coffee, though not to Tim Hortons' (NYSE: THI).
Well, it seems that McDonald's has indeed managed to offer something for everyone, even granolas like me. The results could be seen in its latest reported same-store sales report, which have continued the fast food chain's hot streak. McDonald's global sales from restaurants open more than a year rose 5.9% in September. The world has been kinder to McDonald's than its domestic sales. While U.S. sales rose 3.5% -- increasing consecutively for the 54th month -- same-store sales rose 5.7% in Europe and 12% in its Asia/Pacific, Middle East and Africa division. Its total systemwide sales rose 11.5% for the month and 11.8% for the quarter.
Following these impressive numbers, the company now expects to exceed Wall Street's estimates for third-quarter profit. It now expects to earn 83 cents per share in the quarter when it reports October 19. Including a 6 cents per share gain from the sale of Boston Market, it should report 89 cents per share for the quarter, beating estimates.
No doubt, the company has found a way to offer something for everyone. Its value menu, breakfast offerings and drinks helped boost sales, as did premium coffee. The long hours, the promotions and new products like the wraps I occasionally enjoy, also drove sales growth.
McDonald's shares are trading up 29 cents to $56.54, 0.52% higher. This isn't perhaps the surge some had hoped for, but as the company has been doing so well, much of that surprise was already priced in. MCD shares have gained nearly 28% year-to-date and over 34% the past year. It may just continue this performance a while longer, especially as it encroaches further on Starbucks' business.
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Well, it seems that McDonald's has indeed managed to offer something for everyone, even granolas like me. The results could be seen in its latest reported same-store sales report, which have continued the fast food chain's hot streak. McDonald's global sales from restaurants open more than a year rose 5.9% in September. The world has been kinder to McDonald's than its domestic sales. While U.S. sales rose 3.5% -- increasing consecutively for the 54th month -- same-store sales rose 5.7% in Europe and 12% in its Asia/Pacific, Middle East and Africa division. Its total systemwide sales rose 11.5% for the month and 11.8% for the quarter.
Following these impressive numbers, the company now expects to exceed Wall Street's estimates for third-quarter profit. It now expects to earn 83 cents per share in the quarter when it reports October 19. Including a 6 cents per share gain from the sale of Boston Market, it should report 89 cents per share for the quarter, beating estimates.
No doubt, the company has found a way to offer something for everyone. Its value menu, breakfast offerings and drinks helped boost sales, as did premium coffee. The long hours, the promotions and new products like the wraps I occasionally enjoy, also drove sales growth.
McDonald's shares are trading up 29 cents to $56.54, 0.52% higher. This isn't perhaps the surge some had hoped for, but as the company has been doing so well, much of that surprise was already priced in. MCD shares have gained nearly 28% year-to-date and over 34% the past year. It may just continue this performance a while longer, especially as it encroaches further on Starbucks' business.
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Reader Comments (Page 1 of 1)
10-12-2007 @ 2:38PM
Andrea said...
Even with all the uproar over obesity in this country McDonald's still manages to post these kinds of numbers. This seems to indicate that people either don't care about obesity, or that McD's management is tops (hence the reason you have to study them in business school). Both are probably correct, but I found evidence to back up the latter http://www.newsvisual.com/newsvisual/2007/10/experience-show.html
10-12-2007 @ 5:30PM
Brian Patterson said...
My son got e coli 0157 H:7 from eating a McDonalds meal in August 2002. He was on morphine for 7 days. Both McDonalds and Zurich Ins. denied liability yet the CDC National PulseNet database found isolated and random PFGE matches. My advice to anyone it save your receipts and an uneaten portion of your meal for further testing and confirmation.
10-13-2007 @ 11:59AM
Jim said...
I remember eating at McDonalds when they first opened. It was affordable then and it is affordable now. I`m glad they do not forget us that are trying to save $. A double cheeseburger for a buck, shucks, I can still afford a girlefriend. :)
10-15-2007 @ 2:24PM
Nick said...
Starbucks stock has been on a lackluster downward trend for 12.5 months now, the longest down string in its history. This is highly unusual for a growth company, considering it is set to double in the next 5 years. So where does the stock price go from here? Surely, it must go up. One thing that will help its bottom line (and offset milk cost increases) is the continued falling of the value of the dollar. Last year, for every Euro in profit Starbucks made in the E.U., meant $1.28 . As of today, that same Euro in profit equates to $1.425, more than a 10 percent increase -- without even any net true profit increase. The trend in the dollar will continue for some time; therefore, I think it is safe to say that in dollar terms, Starbucks is probably going to show an acceleration in both top line and bottom line figures for those foreign markets with increasing local foreign currency values visa vie the dollar. In all this should help the company's total bottom line, even taking into account the US market.
The stock price may fluctuate for a short while longer in the 25.90 to 26.50 range; however, I believe now is the time to accumulate the shares. When it starts its upward climb (and it will), it will be a rapid climb and one may lose out on some early momentum. As a growth company, Starbucks in my opinion, should already be a $48 to $50 stock !
10-15-2007 @ 8:35PM
Frank said...
Isn't it amazing that people that eat a hamburger one day and then get e-coli the next seem to worry more about law suits against McDonalds. Anyone that states they got any disease from eating at McDonald's is looking for a lawsuit to file and nothing else. You don't get food poisoning or e-coli over night. It takes time for those things to happen but 99.9% of all claims seem to come the very next day after going to the cleanest restaurant in the business. I would also suggest that it is not corporate McDonald's that should get the credit for the their success. Just go to any corporate store and you will find a McDonald store that is badly managed. The individual owners are the reason for the success of that company. They are also the ones that totally support the Ronald McDonald Houses, not the corporation. The next time you go to a McDonald's, thank the owner/operator for his support of that houses because without their support, they would not be there for the needy families.
10-17-2007 @ 3:48PM
Brian Patterson said...
In response to Frank, e coli does not happen overnight. The bacteria and toxins incubate for several days and then you profusely bleed rectally. Its not pleasant. If left untreated, death is certain. When one is stricken with e coli, you must document at least 7 days prior to getting sick. The CDC only reacts when there are two or more in a cluster....not when there are isolated and randoms PFGE matches. Its the PFGE matches that link people and to the source.