McDonald's (MCD) stock is slightly higher in Tuesday's session after the fast-food giant beat top- and bottom-line expectations for its third quarter, though gains are limited as concerns over an E. coli outbreak linger.
In the quarter ended September 30, McDonald's revenue increased 2.7% year over year to $6.9 billion, driven by a 0.3% increase in comparable-store sales in the United States. Globally, comparable-store sales declined 1.5%. Meanwhile, earnings per share (EPS) were up 1.3% from the year-ago period to $3.23.
"We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending," said McDonald's CEO Chris Kempczinski in a statement. "McDonald's will continue to follow our Accelerating the Arches playbook to drive long-term growth globally and win in this environment."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results beat analysts' expectations. Wall Street was anticipating revenue of $6.8 billion and earnings of $3.20 per share, according to Yahoo Finance.
"McDonald's comparable restaurant takings have fallen for a second consecutive quarter in a row suggesting that the golden arches' recent focus on value offerings hasn't yet delivered the intended uplift in volumes," said Derren Nathan, head of equity research at Hargreaves Lansdown, said in emailed commentary. "A return to growth in the U.S. was one ray of light, albeit only just. International market struggled with a dip in China, and the impact of the conflict in the Middle East more than offsetting an uplift in Latin America."
Update on McDonald's E. coli outbreak
McDonald's temporarily removed Quarter Pounders and slivered onions from its menu after the Centers for Disease Control and Prevention (CDC) announced an E. coli outbreak linked to the fast-food chain's hamburgers last week.
"While the situation appears to be contained, and though it didn't affect Q3 numbers, it's certainly an important development, which I know is on many of your minds," said CEO Chris Kempczinski on McDonald's conference call, adding that the company is sorry and committed to "making this right," according to CNBC.
On Sunday, McDonald's announced that Quarter Pounders will return to menus nationwide in the coming week. In addition, it will no longer source onions from the supplier linked to the outbreak.
Is MCD stock a buy, sell or hold?
McDonald's is down more than 5% since the E. coli news broke, but remains up roughly 2% for the year to date on a total return basis (price change plus dividends). And Wall Street is mostly bullish on the Dow Jones stock.
According to S&P Global Market Intelligence, the consensus analyst target price for MCD stock is $317.65, representing implied upside of just nearly 7% to current levels. Additionally, the consensus recommendation is Buy.
However, Hargreaves Lansdown's Nathan says that the blue chip stock, which is trading at 23 times forward earnings, "still aren't in bargain territory so expect some more volatility until the damage from the public health scare has been quantified."
Related Content
-
Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history.
-
CMS Brings Back Furloughed Staff for Open Enrollment LifelineThe government has recalled approximately 3,000 workers to assist with Medicare and ACA Marketplace Open Enrollment.
-
Targa Resources, Take-Two Interactive, Boston Scientific: Why Experts Rate These Stocks at Strong BuyWall Street is highly bullish on these three high-quality stocks.
-
Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs)Defined outcome ETFs offer a middle ground between traditional equity and fixed-income investments, helping provide downside protection and upside participation.
-
This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had HolesA couple's disastrous experience with reclaimed wood flooring led to safety hazards and a lesson in the critical importance of detailed contracts.
-
US-China Trade Hopes Send Stocks to New Highs: Stock Market TodayApple and Microsoft are on track to join Nvidia in the $4 trillion market cap club.
-
A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and AroundIt's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested.
-
I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally.
-
To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's StepsTax-loss harvesting can offer more advantages for investors than tax relief. Over the long term, it can potentially help you maintain a robust portfolio and build wealth.
-
Social Security Wisdom From a Financial Adviser Receiving Benefits HimselfYou don't know what you don't know, and with Social Security, that can be a costly problem for retirees — one that can last a lifetime.
