NEW YORK (TheStreet) -- McDonald's (MCD) - Get McDonald's Corporation (MCD) Report stock is up by 0.63% to $117.40 in midday trading on Monday, as the company is considering selling part of its stake in its Japanese arm.
An executive recently traveled to Japan to talk with about five potential buyers, including trading houses and investment funds, Nikkei reports. The fast food company, which owns half of McDonald's Holdings Co. in Japan, is proposing the sale of 15% to 33% of outstanding shares, the Japanese newspaper added.
The company's Japanese operations have been struggling after recent scandals and are forecast to have a full-year loss of 38 billion yen, Nikkei noted. Sales have suffered after incidents involving expired chicken last year and food contamination from foreign objects, including a tooth, in January, Reuters reports.
McDonald's has asked potential buyers to respond by mid-January, according to Nikkei.
Separately, recently, 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 has this to say about the recommendation:
We rate MCDONALD'S CORP as a Buy with a ratings score of A-. 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 solid stock price performance, increase in net income, notable return on equity, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 28.44% and other important driving factors, this stock has surged by 28.20% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MCD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Hotels, Restaurants & Leisure industry average. The net income increased by 22.5% when compared to the same quarter one year prior, going from $1,068.40 million to $1,309.20 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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.
- 45.03% 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 19.79% is above that of the industry average.
- Net operating cash flow has slightly increased to $1,947.40 million or 6.24% when compared to the same quarter last year. Despite an increase in cash flow, MCDONALD'S CORP's average is still marginally south of the industry average growth rate of 7.39%.
- You can view the full analysis from the report here: MCD