NEW YORK (TheStreet) -- Shares of McDonald's Corp. (MCD) - Get Report are down -1.13% to $101.20 on heavy trading volume following an announcement by President and CEO Don Thompson at an investor conference presentation today that the fast food chain will intensify commitment to the its customer-focused strategic framework - the Plan to Win - and other actions to enhance long-term shareholder value.
McDonald's plans to optimize its capital and ownership structures and scrutinize G&A spending, and expects to return $18 to $20 billion to shareholders between 2014 and 2016 through a combination of dividends and share repurchases, representing a 10% to 20% increase over the amount of cash returned between 2011 and 2013.
Also, they will refranchise at least 1,500 restaurants by the end of 2016, primarily in Asia/Pacific, Middle East and Africa and Europe, reflecting a more than 50% increase in refranchising activity compared with the prior three-year period.
They will additionally analyze G&A spending with the primary intent of reallocating resources to higher return initiatives and growth areas, including development of the company's global digital capabilities.
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 revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MCD's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
- 43.68% is the gross profit margin for MCDONALD'S CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.98% is above that of the industry average.
- Net operating cash flow has increased to $1,907.30 million or 13.06% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.56%.
- MCDONALD'S CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MCDONALD'S CORP increased its bottom line by earning $5.56 versus $5.36 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $5.56).
- You can view the full analysis from the report here: MCD Ratings Report