McDonald’s Corporation (NYSE: MCD) stock jumped 4 percent Monday after the company once again reported robust same-restaurant sales growth in the most recent quarter. Analysts say the company’s new promotions and Experience of the Future technology push are already paying dividends for McDonald’s investors.
McDonald’s reported first-quarter adjusted earnings per share of $1.79 on revenue of $5.14 billion. Both numbers exceeded consensus analyst expectations of $1.67 and $4.98 billion, respectively. Revenue was down 9 percent compared to a year ago.
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U.S. same-store sales growth for the quarter was 2.9 percent, in line with analyst estimates. Global same-store sales growth was 5.5 percent for the second consecutive quarter, McDonald’s highest mark in six years. Global comparable guest counts were up 0.8 percent.
McDonald’s said its International Lead segment generated a particularly strong 7.8 percent same-store sales growth, led by strength in the U.K. and Germany.
McDonald’s has been focusing on a number of promotions in recent months, including a revamped $1, $2, $3 dollar menu and a “McPick 2 for $5” promotion. Despite concerns over a lack of pricing flexibility from some franchisees, the promotions seem to be working.
“We continued to build upon the broad-based momentum of our business, marking 11 consecutive quarters of positive comparable sales and our fifth consecutive quarter of positive guest counts,” CEO Steve Easterbrook says.
McDonald’s says it plans to invest $2.4 billion in 2018 in renovating its restaurants, adding kiosks and table service. In addition, McDonald’s has been focused on mobile ordering and testing delivery service via a partnership with Uber Eats. McDonald’s says it plans to renovate an additional 4,000 U.S. restaurants in 2018 and open a total of 1,000 new locations.
CFRA analyst Tuna Amobi says McDonald’s is on track for a big 2018.
[See: 7 of the Best Stocks to Buy for 2018.]
“After its generally encouraging or better-than-expected 2017 results, which reflected a relatively healthy increase in global comparable sales, we see a continuing momentum in 2018, with the company seen on track with several key elements of its Velocity Growth Plan,” Amobi says. “Longer term, we see potentially significant upside in China and other emerging markets, where MCD has far fewer restaurants per capita and the middle class is driving consumer spending.”
CFRA has a “buy” rating and $195 price target for MCD stock.
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Value Menu Drives McDonald’s Corporation (MCD) Earnings Beat originally appeared on usnews.com
