OAK BROOK, Ill. ( TheStreet) -- McDonald's ( MCD) booked double-digit profit gains last quarter, beating Wall Street's expectations.

The Golden Arches said early Friday each area of the world where it operates generated higher comps, traffic and profits in the quarter ended June 30.

" McDonald's continues to gain market share despite stagnant-to-declining consumer spending and its momentum is still strong around the world," noted Stifel Nicholaus analyst Steve West.

McDonald's posted earnings of $1.23 billion, or $1.13 per share. Analysts expected earnings of $1.21 billion, or $1.12 per share for the burger-and-fries chain.

Revenues came in at $5.95 billion for McDonald's, better than the $5.91 billion expected, and comparable same-store sales, or sales at stores open at least one year, grew 4.8%. Comps grew 3.7% in the U.S. and 5.2% in Europe.

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While comps were helped by McDonald's dollar menu and from an expanded list of coffee drinks and other beverages, the figure missed analysts' predictions for same-store sales growth of 5%. Comps for the month of June also missed expectations, coming in at 3.7% versus the expected 4.3%.

Investors voiced their disapproval, bidding the stock down 2% in afternoon trading Friday.

West argued that he sees strong comp trends continuing into July, padding his already bullish view on McDonald's shares. He cited McDonald's ability to grow its global market share and execute "game-changing initiatives now in play" like the relatively new McCafe and Angus burgers.

"We believe 2010 and 2011 will sustain positive earnings momentum for this industry leader."

Part of the McCafe strategy for McDonald's was to lure market share away from coffee rival Starbucks ( SBUX), which earlier this week posted better-than-expected revenues and adjusted profits per share that surpassed analysts' consensus call.

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McDonald's stole a good chunk of Starbucks' market share when it upgraded its coffee in 2006. The lower priced option from McDonald's became popular among price sensitive customers and created new competition for Starbucks, pushing the average number of customers visiting a Starbucks store lower by around 13% from 2005 to 2007.

In 2008 McDonald's officially launched its McCafe, further intensifying competition between the brands. The timing of the launch coincided with a period of spending cutbacks among consumers, cutbacks that were already stinging Starbucks and eventually led the coffee giant to close around 890 stores in 2008 and 2009.

Despite missing on comps, McDonald's did outpace fast food peer Yum! Brands ( YUM). Earlier this month, the operator of KFC, Taco Bell and Pizza Hut restaurant chains posted adjusted profits per share that beat estimates by three cents. Management upped its guidance, but apparently not high enough to meet expectations, and the stock took a hit.

Analysts deemed the guidance a conservative measure taken by the Louisville, Ky.-based company to avoid disappointing shareholders.

Yum's comps at U.S. stores were flat year-over-year, dragged by a 7% decline at KFC locations while same-store sales grew at Pizza Hut and Taco Bell. Yum's international stores grew comps 1%.

McDonald's truest rival, Burger King Holdings ( BKC), was particularly hard hit by cutbacks in discretionary spending amid U.S. consumers. The Miami-based burger chain booked top- and bottom-line declines in its most recent reported quarter, which CEO John Chidsey said was a result of high levels of unemployment .

Jefferies analyst Jeff Farmer said last month that, based on 10 years of comps data for a roster of fast food chains, it was Arby's ( WEN), Sonic ( SONC), Jack in the Box ( JACK) and Burger King that suffered the most when nationwide unemployment levels rose.

In its recent quarter McDonald's debuted the Frappe with much success while Starbucks introduced its "however-you-want-it" Frappuccinos.

Without offering specific guidance, McDonald's CEO Jim Skinner said he was confident about the company's performance in the current quarter.

"Our momentum continues with July global comparable sales trending in-line with or better than second quarter sales," he said.

McDonald's board of directors declared a cash dividend of 55 cents per share, payable to shareholders of record on September 1.
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-- Reported by Miriam Marcus Reimer from New York.

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Copyright 2010 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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