McDonald's Previews Major Earnings Beat

It sees second-quarter earnings of 42 cents a share, including 11 cents of charges.
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McDonald's

(MCD) - Get Report

previewed second-quarter earnings Friday that look considerably above the Wall Street consensus estimate.

The hamburger chain said it expects to earn 42 cents a share on the bottom line, including an incremental tax expense of about 9 cents a share related to the repatriation of overseas profits under a new federal law. The estimate also includes a pretax expense of 2 cents a share related to stock options.

If the items reduce second-quarter EPS by 11 cents, McDonald's would post operating earnings of 53 cents a share. Analysts surveyed by Thomson First Call were forecasting earnings of 48 cents a share.

Shares of the

Dow

component rose 81 cents, or 2.7%, to $30.41 after the news hit.

The company disclosed same-restaurant sales from June that were above Wall Street forecasts, although the gains represented a deceleration from the growth posted a year ago. In the U.S., same-restaurant sales rose 5.4% in June from a year ago, while European comps rose 1.3% and Asia-Middle East-and-Africa comps rose 2.9%.

In June 2004, U.S. same-restaurant sales rose 6.6% from June 2003.

Overall June same-store sales rose 3.8% from a year ago, compared with a 5.6% gain in the year-ago month.

"Customers continue to positively respond to new products such as the Fruit & Walnut Salad, core menu favorites and extended hours; all combining to keep our momentum going," the company said. "With more restaurants open longer hours this summer and new Premium Chicken Sandwiches set to launch in August, I'm confident our U.S. business will continue to deliver good results."