How is McDonald's Corporation (NYSE: MCD) holding up during the economic downturn? The largest restaurant chain is expected to report profit of 70 cents per share on revenue of $5.4 billion, according to Thomson Financial. Their average price target for the company's stock is $62.64, above the $58.64 where it recently traded. Shares of the company are up about 20% as investors bet that the cost-conscious consumers would be attracted to cheap McDonald's food. Moreover, the company's cut rate, but delicious coffee continues to give Starbucks Corporation (NASDAQ: SBUX) nightmares. This seems to be a recipe for success boosting comparable same-store sales by 11.7% in February.
McDonald's earnings will be a clear sign of how the consumer is holding up. Many are cutting back on dining out as evidenced by the decline in same-store sales at restaurants at diverse as Ruth's Chris Steak House Inc. (NASDAQ: RUTH) to Darden Restaurants Inc's. (NYSE: DRI) Red Lobster.
But thankfully for shareholders, McDonald's isn't solely reliant on its U.S. business. During the fourth quarter, sales rose by double digits outside its home country. The company should see strong sales group in Europe and emerging markets, according to a Lehman Brothers note quoted by the Associated Press.
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