"McDonald's (NYSE: MCD) has bucked the global recession in February as both global and U.S. same *store sales rose," says Tracey Ryniec, who has chosen the fast food giant as its latest featured company in Zacks Ellite Stock of the Day.
The analyst explains, "The company, which operates more than 32,000 McDonald's restaurants in over 100 countries, reported February comparable sales results on Mar 9 that showed global sales rising 1.4% year over year even as Feb 2008 included an extra day due to leap year. Excluding the extra day, sales grew 5.4%.
"U.S. sales climbed 2.8%, or 6.8% if you exclude the extra calendar day in 2008. Asia/Pacific, Middle East and Africa rose 0.7%, or 4.1% if you exclude the extra calendar day. Only Europe saw a decline, losing 0.2%, but if you exclude the extra day, even Europe increased 4%.
"U.S. gained on the back of the chicken line-up, the core menu, especially the Quarter Pounder, and the popularity of its breakfasts. Europe's growth was led by the U.K. and Russia but was partially offset by a slower Germany.
"Australia continued to be strong in the Asia/Pacific region. China saw weaker sales, primarily due to the celebration of Chinese New Year during the month when, in 2008, it was celebrated a month earlier, in January.
"Despite sales growth in the first two months of the quarter, McDonald's still warned on Mar 9 that volatile foreign currency exchange rates and commodity costs would pressure revenue and margins in the first quarter.
"Foreign currencies have been especially weak in Eastern Europe, which the company said will negatively impact first quarter results by at least 7 cents to 9 cents per share, if rates remain at current levels.
"McDonald's didn't provide any actual numbers on the impact of commodity costs but said that commodity pressures are expected to have a greater impact on results in the first half of the year. Overall, the stock is trading with a forward P/E of 12.58. MCD has an outstanding 1-year return on equity (ROE) of 30.29%."
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.
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
MEMC CEO Forgoes Bonus; Money Will Go to Retrain Workers
