Piper Jaffray: Whatever Easterbrook Wants To Do Is Not Showing Up In McDonald's Results, Can Take 12 to 18 Months

McDonald's Corporation MCD came up with worse than expected quarterly earnings before market opening on Wednesday.

Nicole Miller Regan, Piper Jaffray senior restaurant analyst, was on CNBC to explain why shares traded up.

Could Have Been Worse

On why McDonald’s is trading up despite weak earnings, Reagan said, “Well this why we would always be careful around earnings. I mean, these stocks are trading on sentiment more than they are on fundamentals. When you look at this as just a one point in time, clearly McDonald’s is trading up with the expectation that it could have been worse and it’s not.”

Easterbrook’s Efforts Won’t Show up Right Now

Regan was asked if she thinks that McDonald’s new CEO, Steve Easterbrook, is bringing a turnaround in the company. She replied, “Well we are still living in a Don Thompson [Former McDonald’s CEO] results at this point of time because any menu or marketing change will take 12 to 18 months to get through the pipeline. So, whatever is that Easterbrook wants to do is not showing up in the P&L today.”

“That being said, I think he has expressed to the franchisees what he wants to do, but in terms of the analyst community, I think, it needs to be more direct solidified plan.”

Franchisees Must Buy In

On how convinced are franchisees with Easterbrook’s plan, Reagan said, “I think that if the performance shows up, they will follow suit and that is what we think is a critical aspect of the McDonald’s turnaround story is getting the franchisees to buy in and hearing what it is that they want. That’s critical. It’s paramount to the McDonald’s recovery and success.”