McDonald’s (MCD) Stock Down, Seeks Partners for Malaysia, Singapore Franchises

McDonald’s (MCD) is looking to move away from direct ownership in Malaysia and Singapore.
By Rachel Aldrich ,

NEW YORK (TheStreet) -- Shares of McDonald's (MCD) - Get Report  are falling 3.96% to $122.36 this morning after the company announced it was seeking franchise partners for its locations in Malaysia and Singapore, Reuters reports.

The company is speaking to "suitable candidates," but did not provide any additional details or a timeline for the deal. The franchise rights in the two regions could be worth about $400 million, Bloomberg reports.

McDonald's is looking to move away from direct ownership and operation in Asia. An announcement by the company in March indicated that McDonald's would reorganize its Asia operations by bringing in partners.

Competitor Yum Brands (YUM) is making a similar move, restructuring its China business for a spin-off and a speculated IPO in 2017.

"McDonald's has taken the decision to adopt a development licensee model for the Malaysia and Singapore markets in order to enable focused investment in the brand and speed up growth in these key Asian markets," the company said in a statement.

McDonald's reported 2016 second quarter earnings this morning, with adjusted earnings of $1.45 beating analysts' estimates of $1.39 per share. The company reported revenue of $6.27 billion for the period, meeting Wall Street's estimates.

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rated this stock as a "buy" with a ratings score of B.

The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, notable return on equity, expanding profit margins and good cash flow from operations. TheStreet Ratings feels its strengths outweigh the fact that the company has had generally high debt management risk by most measures that TheStreet Ratings evaluated.

You can view the full analysis from the report here: MCD

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