NEW YORK (TheStreet) -- McDonald's (MCD) - Get Report reported 2016 second quarter earnings on a GAAP basis of $1.25 per share and adjusted earnings of $1.45 per share on revenue of $6.26 billion, beating analyst estimates of $1.38 per share on a revenue of $6.27 billion, CNBC's Kayla Taushe reported on "Squawk Box" Tuesday.

The company's same store sales in the U.S. grew by 1.8%, falling short of analyst estimates of a 3.4% growth, Taushe said.

The restaurant industry is in a slump and it doesn't seem McDonald's is immune to that, Morningstar Senior Restaurant Analyst RJ Hottovy told CNBC.

This puts the company in a difficult situation with pricing power opportunity and labor cost, Hottovy said. 

"I think if you look compared to a year ago, I think the company's in a much better place," he said.

McDonald's CEO Steve Easterbrook has realigned the business, is testing out premium products and all-day breakfast. Combine that with slowing industry sales and the company might face negative sales in the U.S, Hottovy said.

The company has had success with its pick two platform, but are still experimenting with its menu and pricing the premium products that attract customers from competitors, he said.

Shares of McDonalds are up 30% over the last year but are down 3.24% to $123.27 Tuesday morning. This is a result of broader selling, he added.

Investors are becoming bearish on the stock as this is the third or fourth consecutive earnings report from the industry that has outlined negative results. Analysts expect it to continue for the rest of the earnings season, Hottovy explained.

Separately, TheStreet Ratings team set 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 team feels its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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. 

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

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