Will McDonald's (MCD) Stock Be Affected By Increased Russian Scrutiny?

NEW YORK (TheStreet) -- McDonald's Corp. (MCD) is seeing Russian authorities extend their scrutiny of the restaurant chain to several regions today, carrying out inspections at a number of locations, amid a standoff with the West over Ukraine, Reuters reports.

TheStreet's Julia Sun has more on Russia's inspections of McDonald's restaurants:


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The inspections are viewed by many businessmen as retaliation for Western sanctions against Russia because of its support for separatist rebels in eastern Ukraine, and they fear the retribution could spread to other symbols of Western capitalism, Reuters said.

McDonald's operates 440 restaurants in Russia and considers the country one of its top seven outside the U.S. and Canada, according to its 2013 annual report. Nearly a million people a day use its restaurants there.

 

Shares of McDonald's are slightly higher in mid-morning trading.

TheStreet Ratings team rates MCDONALD'S CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate MCDONALD'S CORP (MCD) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, growth in earnings per share and expanding profit margins. 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 5.4%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.96, 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 1.46, which illustrates the ability to avoid short-term cash problems.
  • MCDONALD'S CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. 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 ($5.57 versus $5.56).
  • 44.52% is the gross profit margin for MCDONALD'S CORP which we consider to be strong. Regardless of MCD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCD's net profit margin of 19.31% compares favorably to the industry average.
  • Net operating cash flow has declined marginally to $1,487.00 million or 1.51% when compared to the same quarter last year. Despite a decrease in cash flow MCDONALD'S CORP is still fairing well by exceeding its industry average cash flow growth rate of -21.67%.
  • You can view the full analysis from the report here: MCD Ratings Report
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