Act Fast for Convenient McDonald's Profits

NEW YORK ( TheStreet) -- Investors looking for great returns often complain about the perceived lack of value in the market, even as the Street focuses its attention on momentum growth stories. Although McDonald's ( MCD) may not be sexy as Chipotle Mexican Grill ( CMG) or Starbucks ( SBUX), there's been an overreaction to the company's presumed demise.

Yes, weak same-store sales and slower traffic have hurt McDonald's bottom line. But there's no evidence to support the drumbeat from analysts citing poor margins. It's not like McDonald's fourth-quarter earnings results were impressive. As with less-than-stellar performances from Yum! Brands (YUM) and Coca-Cola (KO), McDonald's absolute performance was not that far off from expectations. And with the stock down 2% so far on the year, these shares are once again on the value menu.

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With reported revenue growth of only 2% year over year and missing consensus estimates, I won't pretend that McDonald's ended the year on a strong note. Same-store-sales (comps, or the performances of stores open for at least one year) registered at just 0.1% and continue to be the main impediment to growth.

This wasn't much of a surprise, however. Save for Chipotle, the entire consumer discretionary space has struggled this earnings season, including so-called "recession-proof stocks" like Wal-Mart (WMT). In that regard, as with Wal-Mart, McDonald's management has dealt with issues (I won't say distractions) regarding what many believe to be poor wages for the company's frontline workers.

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As a result, some concessions were made. And this led to earnings being essentially flat at $1.40 billion with earnings per share advancing to $1.40. This was enough to beat Street estimates by 1 cent. I'd say management deserves credit for effectively managing costs. The Street, meanwhile, opted to focus more on how McDonald's compared to Chipotle. Investors have begun to buy into this comparison. But this makes absolutely no sense.

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