McDonalds Corp (NYSE: MCD) stock traded mostly flat on Thursday after the company once again reported solid same-restaurant sales growth in the second quarter. Analysts say the company’s Experience of the Future technology initiative and its value offerings have McDonald’s on the right long-term track.
McDonald’s reported second-quarter adjusted earnings per share of $1.99 on revenue of $5.35 billion. Both numbers exceeded consensus analyst expectations of $1.92 and $5.32 billion, respectively. Revenue was down 12 percent compared to a year ago.
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U.S. same-store sales growth for the quarter was 2.6 percent, down from 2.9 percent in the first quarter. Global same-store sales growth was 4 percent, down from 5.5 percent in the past two quarters. Analysts had been expecting just 3.5 percent growth this quarter. McDonald’s has now reported 12 consecutive quarters of positive comparable sales.
McDonald’s says its International Lead segment generated a particularly strong 4.9 percent same-store sales growth, led by strength in the U.K. and France.
In recent quarters, McDonald’s has been focusing primarily on tweaking its menu and adding value-oriented promotions. It has also been investing heavily in its Experience of the Future drive, which includes mobile and kiosk ordering and delivery via Uber Eats. McDonald’s has said it will be investing $2.4 billion in 2018 in renovating its restaurants and making them more technology-friendly. The company has previously said it will be renovating 4,000 restaurants this year and opening 1,000 new locations.
So far, the results of CEO Steve Easterbrook’s strategy have been encouraging.
“We’re pleased with the results of our international business and the progress we’re making in the U.S. on executing on our Velocity Growth Plan priorities,” Easterbrook says in a statement.
Bank of America analyst Gregory Francfort says McDonald’s is making all the right moves for long-term investors.
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“We continue to like the stock and view the risk-reward as favorable at a 5.5 percentfree cash flow yield for 2 percent unit growth and mid-single digit global comps,” Francfort says. “We also model Experience of the Future reimaging adding 20 [basis points] to 2018 comps and 40bps to 2019.”
Bank of America has a “buy” rating and $190 price target for MCD stock.
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McDonalds Corp (MCD) Stock Flat Following Modest Earnings Beat originally appeared on usnews.com
