McDonald’s (MCD) Stock Up Following May Sales Results

NEW YORK (TheStreet) --Shares of McDonald's Corp. (MCD) are higher by 0.47% to $96 in pre-market trading on Monday morning, after the fast food restaurant chain posted better than expected global same store sales results for May 2015.

For last month the Big Mac maker said its global same store sales fell by 0.3%, while analysts polled by Consensus Metrix were expecting a decline of 0.9%.

McDonald's got a boost due to demand in Europe, while sales still struggled in Asia and in the U.S., Bloomberg reports.

In May, European sales grew by 2.3%, analysts were expecting a 0.6% rise.

McDonald's is under the leadership of new CEO Steve Easterbrook, who took over the job in March.

Easterbrook said he is looking to transform the largest restaurant chain in the world into a "modern progressive burger company," Bloomberg noted. Adding that last month Easterbrook announced plans to turn the company around by cutting costs, reorganizing management and returning cash to its shareholders.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "It's a beginning and it is why they hired him. I think he can simplify and win back the franchisees."

Additionally, in May Easterbrook announced that McDonald's will end the practice of releasing its monthly sales data beginning in July.

Separately, 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 number of 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 notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
  • 43.42% 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 13.61% compares favorably to the industry average.
  • MCD, with its decline in revenue, slightly underperformed the industry average of 7.5%. Since the same quarter one year prior, revenues fell by 11.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of MCDONALD'S CORP has not done very well: it is down 5.99% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • Net operating cash flow has decreased to $1,699.50 million or 10.89% when compared to the same quarter last year. Despite a decrease in cash flow of 10.89%, MCDONALD'S CORP is in line with the industry average cash flow growth rate of -11.64%.
  • You can view the full analysis from the report here: MCD Ratings Report

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