McDonald's Q4 Beat Another Step In The Early Stages Of A Turnaround

McDonald's Corporation MCD reported better-than-expected fourth-quarter earnings and global comps, as double-digit growth in foundational markets offset tough domestic environment.

Print Recap

Here is a gist of McDonald’s fourth-quarter results:

• Q4 EPS at $1.44 versus estimated $1.41.
• Revenue of $6.03 billion versus estimated $5.99 billion.
• Comps down 1.3 percent in United States versus the estimated 1.4 percent down.
• International comps up 2.8 percent.
• High growth segment comps up 4.7 percent.
• Foundational markets comps up 11.1 percent.
• Q4 global comps up 2.7 percent versus the estimated 1.4 percent increase.

Stephens: Overweight, $135 PT

Stephens, which maintains its Overweight rating and price target of $135, is positive on the company’s international strength and believes the company is in the early stages of a multi-year turnaround.

The brokerage pointed out that, despite softer trends throughout the space, McDonald’s delivered better-than-expected results across three of the four segments, and noted that U.S. same-store sales were in line with expectations due to the lapping of ADB.

“We continue to like the stock at current levels and believe that these global results are a net positive and reminder of the global strength and opportunity of the brand, despite undue focus on difficult domestic comparisons,” analyst Will Slabaugh wrote in a note.

On the call, the analyst will be looking for updates on the refranchising initiative along with the performance of ADB 2.0.

Shares of McDonald's closed Friday’s trading at $122.26 and were seen down 1.18 percent at $120.77 Monday morning.