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Sozzi Reviews Saucy McDonald's Under Easterbrook's Management

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Sozzi Reviews Saucy McDonald's Under Easterbrook's Management

  • Shares of McDonald's Corporation (NYSE: MCD) have gained more than 20 percent year-to-date, standing among the best performers of the year.
  • In a email, The Street’s Brian S. Sozzi pointed out that “with that big burden comes higher expectations for management.”
  • The reporter decided to grade the company’s performance in different fields.
  • McDonald's story is now very different than it was at the beginning of the year when CEO Don Thompson was leaving the company.

    Despite the fact that same-restaurant sales in the United States are lagging most of the fast-food industry, the new CEO, Steve Easterbrook, “has managed to change the narrative on the burger giant,” Sozzi assured.

    Under New Management

    The expert pointed out a few areas where McDonald’s has improved since Easterbrook took over, including food preparation, service and franchisee satisfaction.

    However, he continued, Easterbrook now faces a new challenge: “To keep moving the narrative forward to justify a company that will be hard-pressed to deliver 5 percent to 7 percent operating income growth in 2016.”

    Moreover, the latest investor day, held on November 10, was a mixed bag for the CEO and his team, Sozzi pointed out. There were good news and not-so-good news. Overall, the analyst believes the shares “deserve to trade sideways into the next earnings report.”

    Related Link: McDonald's Not Pursuing REIT

    Grading The Company's Performance

  • Moving The Narrative Forward: B-
  • Trust In The Management Team: B+ Not rated A because of the not very “shareholder friendly approach to driving value from its lucrative real estate.”
  • Strategies In Place To Thwart Rivals: F
  • Finally, he looked into food-quality, highlighting a few concerns like the excessive use of condiments and the use of “poor-quality cheese product.”

    Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

    Image Credit: Public Domain, via Wikimedia Commons

    Latest Ratings for MCD

    DateFirmActionFromTo
    Jul 2019MaintainsOutperform
    Jul 2019MaintainsOverweight
    Jul 2019MaintainsOutperform

    View More Analyst Ratings for MCD
    View the Latest Analyst Ratings

    Posted-In: Brian Sozzi Steve EasterbrookAnalyst Color Long Ideas Restaurants Analyst Ratings Trading Ideas General Best of Benzinga

     

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