NEW YORK ( TheStreet) -- Fast food giant McDonald's (MCD - Get Report) is without a doubt the gold standard among its peers, a group which includes names such as Burger King and Wendy's (WEN - Get Report). For that matter, there are very few companies performing as well as McDonald's in any category -- including growing average annual sales by 6% while more than doubling its operating margins.
However, for as dominant as the company has been over the past decade, it rarely ever gets mentioned among the best-run operations on the market. But on the heels of a somewhat disappointing quarter, opportunistic investors may find long-term value as a result of a market's overreaction to the company's short-term hiccup.
Q3 Wasn't Juicy, but Still Edible
McDonald's reported third quarter net income of $1.46 billion, or $1.43 per share and missing analysts' estimates of $1.47 per share. The decline in net income by 3% year over year was particularly disappointing since it followed the second quarter, during which profits also fell off by 4.5%. On the other hand, revenue was impressive.
Although revenue dipped 0.2% year over year, the company managed to exceed estimates with sales reaching $7.15 billion vs. analysts' estimates of $6.94 billion. Consequently, sales totals were not enough to prolong the company's streak of four consecutive quarters of revenue growth.Operating income was a little soft -- showing a 4% decline to $2.29 billion. Likewise, due to increased competition, operating margins registered at 32% -- shedding by 140 basis points. But impressively, same-store sales (comps) were not too adversely impacted. U.S. restaurants produced comps growth of 1.2%. Similarly, comps in Europe also performed well. Despite the ongoing fiscal concerns abroad, the company enjoyed same-store-sales growth of 1.8%. This means that McDonald's has found ways to grow market share in the region despite stiff competition; 1.4% comp growth in the Asia/Pacific and Africa division was equally impressive.