The upside for McDonald’s is that, year-to-date, U.S. same-store sales have been all traffic-driven, noted Morgan Stanley analyst John Glass.
“Traffic growth again exceeded overall comp growth with new products and heavy marketing driving the expansion,” Glass wrote. “We believe weather likely played a negative factor in the month and comps have yet to show a deceleration in the face of rising energy prices.”
The Europe and the Asia/Pacific, Middle East and Africa, or Ampea, regions were able to offset the slower growth in the U.S., with February same-store sales up 5.1% and 4%, respectively, both beating expectations.
The 3.9% company-wide same-store sales growth compared with analysts’ average prediction of a 3.3% gain.
What I like about MCD
MCD is trading at a significant discount to its peers PE 13.65 vs 34.02 for peers.
MCD is one of the more profitable companies in the Restaurants industry with a net margin of 20.55%.
MCD pays an annual dividend of $2.44 which, at its current stock price, produces a yield of 3.20% – note: few companies in the restaurant industry pay a dividend.
MCD is overall quite efficient in comparison to its peers with a Return on Assets, Return on Equity, and Revenues Per Employee of 15.90%, 34.51%, and $60,186.50 respectively.
MCD‘s debt to total capital ratio, at 44.02%, is in-line with the Restaurants industry’s norm despite its increase over the last year.
The stock is down due to February weather in the US reduced sales. This is a buying opportunity, I will be adding to my position in MCD. at $75 per share.