NEW YORK (TheStreet) -- Shares of McDonald's Corp. (MCD) are lower by -1.56% to $96.03 on heavy trading volume as the company reported second quarter profit declined 1%, as the fast-food company continues to struggle to connect with customers, a trend the company indicated isn't likely to improve soon, the Wall Street Journal reported.
McDonald's said it expects sales at global restaurants opened more than a year to be negative this month. The company also said that it expects full-year global same-store sales to be relatively similar to the lackluster performance seen since the start of the year through June, amid a lack of material changes to the operating environment., the Journal added.
The company reported a second quarter profit of $1.39 billion, or $1.40 a share, compared with $1.4 billion, or $1.38 a share, a year earlier. The per-share figure was higher, despite lower total earnings, because the company's number of shares outstanding declined, the Journal noted.
Revenue was up 1% to $7.18 billion.
Analysts polled by Thomson Reuters had expected earnings of $1.44 a share and revenue of $7.29 billion.
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 notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MCD's revenue growth has slightly outpaced the industry average of 8.4%. 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 -21.57%.
- 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