"McDonald's (NYSE: MCD) continues to just hum along as a cash flow and profit machine," says trading and investing expert Bill Martin.
In his industry-leading BullMarket.com, he explains, "The king of the quick service restaurant sector once again booked a quarter's worth of same-store sales increases as it benefited from consumers 'trading down' from more expensive dining options."
"Though the headline fourth quarter numbers show a year-over-year drop in profit, McDonald's nonetheless delivered another strong quarter to wrap up 2008 and said sales were continuing to grow on a same-store basis so far in 2009.
"Revenue in the fourth quarter fell a bit short of expectations, but that was due to the impact of a stronger U.S. dollar, not any operational shortcoming. Excluding the impact of tax gains the company booked in Q4 2007, adjusted EPS rose 19%.
"While other restaurant segments have struggled to maintain sales momentum as the global economy weakened, McDonald's has churned along like a well-oiled machine.
"Global comparable sales, which measures sales growth at locations open at least 13 months, increased by 7.2% in the fourth quarter. Same-store sales in the core U.S. market grew by 5.0%; Europe grew by 7.6%; and Asia Pacific/Middle East/Africa was up 10.0%.
"The company said its U.S. business benefited from the addition of the Southern Style Chicken biscuit and sandwich, improved service at its drive-through windows, and the expansion of its high-end coffee drinks.
"Management attributes the enduring popularity of the McDonald's brand to the variety of choices on its menu; improved restaurant operations; convenience; everyday predictable low prices; and ongoing restaurant reinvestment.
"McDonald's said it plans to invest $2.1 billion in 2009, with slightly more emphasis on spending to re-imaging older restaurants than open new ones. It's about the same amount the company spent in 2008 on capital expenditures.
"The company said it will open about 1,000 outlets worldwide, broken down as 165 new outlets in the U.S., 245 in Europe, and 475 in the Asia Pacific/Middle East/Africa region. After routine closings, net new unit growth is expected to be around 650.
"We keep expecting the company to feel 'some' impact from the slowing global economy, but it doesn't appear to be on the immediate horizon. The strong dollar is a headwind, but the impact shouldn't be overwhelming.
"One tailwind for McDonald's and other restaurant operators is that the sector should start to see some relief on the commodity cost front. Overall, it was another strong quarter from the king of the quick service restaurant sector. The stock remains a 'Buy.'"
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
2-09-2009 @ 12:29PM
eventbox said...
my number 1 stock
2-09-2009 @ 1:24PM
Kent said...
MacDonald is truly an American icon on equal footing with Coca Cola. Ray Kroc would be absolutely thrilled, but probably not surprised at its performance. Smart move not to open new stores and fall in the same trap that Starbucks is now trying to undo.
2-09-2009 @ 4:14PM
ryan said...
Love MCD. Their definitely going to prevail in this economy. They have had such a strong month, bullish sentiment (http://www.predictwallstreet.com/forecast.aspx?symbol=MCD) and I cant imagine them not staying ahead in the quarter to come.
2-10-2009 @ 1:05PM
Alexandra said...
McDonald's is the ONLY stock that I would think of buying ,in the economic situation that we are in right now. This Company knows how to operate profitably !