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McDonald's Earnings Report Is Beginning of the End for Restaurant Bull Market

NEW YORK (TheStreet) -- Shares of McDonald's (MCD - Get Report) are roughly flat Tuesday morning after the company -- a bellwether for restaurant stocks -- reported first-quarter earnings that missed estimates.

McDonald's stock -- which has risen 3% this year -- was recently trading at $99.50, down 17 cents.

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While first-quarter revenue of $6.3 billion met analysts' average estimate, earnings per share came up 3 cents short at $1.21.

Revenue was up just 1.4% versus the same quarter last year, while net income fell 5.1%. While global same-store sales rose 0.5%, they fell 1.7% in the U.S. Given that the company generated about 31.5% of total revenue from domestic locations last year, the drop in U.S. same-store sales is a concern for the market.

McDonald's, arguably one of the best-run companies in the business, has a market capitalization of $99 billion, three times that of its closest competitor, Yum Brands (YUM - Get Report).

McDonald's also boasts among the highest net profit margins among publicly traded restaurant companies, at close to 20% during 2013. The stock is widely followed by analysts, and earnings shortfalls, especially in this environment, may be a harbinger of things to come for the industry as a whole.

MCD Chart MCD data by YCharts

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MCD $98.90 0.00%
YUM $81.11 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
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