NEW YORK (TheStreet) -- McDonald's (MCD - Get Report) shares are down 0.26% to $96.53 in early market trading on Wednesday after the fast food restaurant announced plans to fully transition to cage-free eggs in the U.S. and Canada by 2025.
The move comes as the company looks to appeal to more health conscious consumers who are interested in where their food comes from.
The company buys about 2 billion eggs annually for its U.S. stores and an additional 120 million eggs for its Canadian locations.
Today's move comes after last month's announcement that it will begin serving breakfast all-day starting in October.
There has been an industry-wide shift towards cage-free eggs as McDonald's joins 60 other restaurants including rival Burger King (BKW) who have pledged to make the switch.
McDonald's does not expect the switch to have an impact on its prices, a company spokesman told Quartz.
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 several positive factors, 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, good cash flow from operations, solid stock price performance 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:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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.
- Net operating cash flow has slightly increased to $1,513.50 million or 1.78% when compared to the same quarter last year. In addition, MCDONALD'S CORP has also modestly surpassed the industry average cash flow growth rate of -7.88%.
- Compared to where it was trading a year ago, MCD's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 44.36% 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 18.50% compares favorably to the industry average.
- MCD, with its decline in revenue, slightly underperformed the industry average of 4.0%. Since the same quarter one year prior, revenues slightly dropped by 9.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: MCD Ratings Report