McDonald’s (MCD) made a fourth-quarter profit that fell short of Wall Street expectations on Thursday, but the fast-food giant got a boost in the COVID-19 trends of menu innovation, takeaway and mobile ordering.
This is what the fast food restaurant in Chicago posted, compared to Wall Street’s expectations, according to a Bloomberg consensus estimate:
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Income: $ 5.31 billion versus $ 5.37 billion expected
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Adj. earnings per share (EPS): Expected $ 1.70 to $ 1.77 per share
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US sales in the same store: 5.5% versus 4.89% expected
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International sales in the same store: -1.3% versus -4.32% expected
The Golden Arches said U.S. sales were boosted by an increase in average check size, which led to ‘positive comparable sales’ linked to ‘strategic marketing investments and promotional activities’ for new menus.
McDonald’s President and CEO Chris Kempczinski said: ‘2020 will be remembered as one of McDonald’s most challenging, yet inspiring, moments in our long history. The resilience of the McDonald’s system is evident – making safety and service a priority, putting our customers and people first, and running excellent restaurants. ‘
On Monday, the home of the Big Mac and Quarter Pounder, announced that Spicy Chicken McNuggets and Mighty Hot Sauce will return for a limited time, from February 1st. And on February 24, McDonald’s jumps into the chicken sandwich wars with three different iterations of crispy chicken sandwich: Classic, Luxurious and Spicy.
Wall Street and Main Street have also rallied around the expected launch of the McPlant, a plant-based burger created by and for the fast-food chain.
Like many restaurant chains, McDonald’s kept sales afloat through menu innovation, aggressively switching to mobile orders that customers can pre-order with – then grab their food and go.
“By investing for the future and leveraging competitive strengths in our Acceleration of the Arches strategy in throughput, delivery and our growing digital presence, we are confident that we can continue to capture market share and drive long-term sustainable growth for all stakeholders. McDonald’s President and CEO Chris Kempczinski said Thursday.
And after a year focused primarily on digital, delivery and ongoing, analysts are optimistic about the long-term recovery for the fast-food giant.
JP Morgan analyst John Ivankoe on Monday noted that McDonald’s is’ well capitalized ‘and well positioned to recover in the post-COVID era,’ as evidenced by a near-record 12% increase in comparable sales that in September 2020. ‘
Compared to other similar fast-food giants like Brands (YUM), Starbucks (SBUX) and Dominos (DPZ), the valuation of the Golden Arches is relatively better, Ivankoe noted.
JP Morgan remains overweight on shares in McDonald’s, with a 12-month price target of $ 215. “We believe the valuation of McDonald’s should be longer,” the analyst added.
In a recent comment, Christopher Carril, an analyst at RBC Capital Markets, said he was keeping a close eye on ‘relative shifts in top-line trends’ and foot traffic – including those for other giants such as Restaurant Brands International (QSR), Wendy’s (WEN) and YUM !.
For McDonald’s in the fourth quarter, he will also be looking for ‘momentum transferred to start the third quarter, with the top line being helped continue the promotion of the famous meals and the McRib.’
In December, we just worked on it.
“I think McDonald’s has done a great job of improving sales with the McRib with better marketing … there will be a good catalyst until at least the first part of 2021,” said Dennis Geiger, UBS restaurant analyst. told Yahoo Finance Live yesterday. month.
“So there will be good figures from a sales perspective from there,” he added.
BTIG analyst Peter Saleh of BTIG also monitors menu innovation. In a November note, he reiterated the firm’s “Buy” rating and $ 245 price target, with a nod to new menu items such as McPlant, McRib and crispy chicken.
McDonald’s shares, which closed lower at $ 207.83 a share on Wednesday, fell modestly in trading before the market.
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.
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