McDonald's Slips to 52-Week Low on Back-to-Back Troubles

Shares of McDonald's Corp. MCD slipped to a 52-week low of $92.20 on Sep 8 following the back-to-back shutdown of stores in Russia. Moreover, the company is facing allegations of buying meat from suppliers that did not conform to standards. Labor demanding higher wages have also added to the woes of the company lately.

These headwinds have negatively affected the company's reputation and sales and have caught investors' attention. As a result, the company's share price has been declining over the past few days.

Why the Share Price Decline?

In addition to being plagued by adverse impacts of a sluggish domestic economy, the restaurant chain has been suffering from diverse problems in the international markets.

Reportedly, the growing tension between Moscow and Washington following restrictions imposed by the U.S. on Russia that hit the nation's largest oil producer, Rosneft, and other energy, financial and defense firms has prompted the Russian government to bring the popular food chain under strict scrutiny.

Several lawsuits have been filed against the company and several of its stores have been forced to shutter following allegations of violating the country's nutritional standards. (Read: 100 McDonald's Units under Russia's Scrutiny; 12 Shuttered)

Additionally, McDonald's Russia has been facing difficult conditions in China. The company was reportedly found selling chicken fed with unapproved and excessive levels of antibiotic drugs and growth hormones. (Read: Food-Safety Concerns Threaten Yum! & McDonald's China Sales)

Moreover, the company has been suffering from internal labor problems with laborers demanding a wage hike. Investors believe that a hike in the minimum wage along with an already elevated employee compensation expense will affect McDonald's' margins negatively. (Read: Fast Food Strike Puts These 3 Restaurant Stocks in Focus)

Investors are particularly concerned about this company as the ongoing issues can adversely impact McDonald's' international sales especially at a time when its comparable sales in the U.S. are suffering due to declining consumer spending in a sluggishly recovering economy. In fact, this Zacks Rank #4 (Sell) company will soon report its comps for the month of August, which are expected to be lackluster.

Other Stocks to Consider

Some better-ranked stocks in the same industry include BJ's Restaurants, Inc. BJRI, Chipotle Mexican Grill, Inc. CMG and Jamba, Inc. JMBA. While Jamba and Chipotle Mexican Grill sport a Zacks Rank #1 (Strong Buy), BJ's Restaurants carry a Zacks Rank #2 (Buy).