
Let's Do Breakfast: McDonald's (MCD), Dunkin' or Starbucks Stock?
NEW YORK (TheStreet) -- Different menus, different price points and different charts -- where are you going for breakfast?
McDonald's Corp. (MCD) - Get Report reported this morning and the stock exploded on the upside to new highs with an impressive breakaway gap and heavy volume -- which has been the missing ingredient over the past two weeks. In the chart, above, we show the three-year history of MCD with a broad sideways trading range as MCD crossed back and forth around the 40-week moving average. Based on the height of this consolidation, we would look for MCD to rally into the $120 to $130 area longer-term.
Dunkin' Brands Group (DNKN) - Get Report had a positive-looking chart until recently. Prices for DNKN broke out to new highs this summer, but then in July and August prices began to tumble. The slope of the 50-day moving average turned down and the On-Balance-Volume line moved lower, confirming the price weakness. Momentum has not diverged from the price action and a death cross -- 50-day average declining below the 200-day -- happened earlier this month. With prices in a downtrend and below their 2014 lows, we look for DNKN to grind lower into the $40 to $35 area.
Starbucks Corp. (SBUX) - Get Report likes its roast dark and its price trend bullish. The three-year weekly chart of SBUX, above, shows the strong uptrend -- with prices well above the rising, 40-week moving average and the steadily rising On-Balance-Volume line. Our next price target for SBUX is the $68 to $70 area.
Bon appétit.
TheStreet Ratings team rates MCDONALD'S CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
We rate MCDONALD'S CORP (MCD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, MCDONALD'S CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has slightly increased to $1,513.50 million or 1.78% when compared to the same quarter last year. In addition, MCDONALD'S CORP has also modestly surpassed the industry average cash flow growth rate of -4.90%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 44.36% is the gross profit margin for MCDONALD'S CORP which we consider to be strong. Regardless of MCD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCD's net profit margin of 18.50% compares favorably to the industry average.
- MCD, with its decline in revenue, slightly underperformed the industry average of 3.3%. Since the same quarter one year prior, revenues slightly dropped by 9.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: MCD











