Americans Are Starting the Day at McDonalds

McDonald's

revealed on Wednesday that revenue rose 6.7 percent in January, thanks to an increase in sales on breakfast items, plus beverages and the new Chicken McBites. Obviously, McDonald's is the cornerstone of every American breakfast. All joking aside though, the oatmeal products that MCD introduced last year have been incredibly popular. The company's strongest January results were at home, with revenue in American restaurants that have been open over a year rising 7.8 percent. There was a 7.3 percent increase in Asia, the Middle East and Africa, and 4 percent in Europe. Perhaps surprisingly, Europe is MCD's largest market, accounting for 40 percent of its revenue. The U.S. accounts for 31 percent, according to the

. MCD has managed to keep its head well above water during the recession, adding new products like the aforementioned oatmeal, plus orange juice and new coffee flavors, to steal a few customers from places like Starbucks. As an “eating out” option, it remains affordable to most people, making a meal there easy to justify even during a difficult economic time. McDonald's January gain did beat the 6.5 percent increase expected by analysts. MCD's stock gained 44 cents to $101.35 in premarket trading on Wednesday. Jefferies released a report on Wednesday, saying that, “While MCD has seen consistently strong sales trends since its turnaround (especially impressive in regions like Europe), we remain concerned that even mid-to-upper single digit surprises in SSS may not be enough to drive high-quality earnings upside given the cost headwinds the company will face this year. Food costs are expected to peak in 1Q and remain high through '12 (especially beef), the Olympics and O/O Conference will bump up G&A, and a strong FX benefit is unlikely. January trends are encouraging but in line, and we maintain our modeled 7% SSS in 1Q (note strong trading day benefits in Feb/Mar) & 4.1% for the year, vs. cons. of 6.6% & 4.6%, respectively.” Commenting on MCD's strong global same-store sales, Sterne Agee said that, “These results continue to underscore our belief that MCD is the best-positioned player in the QSR segment. We believe MCD will continue to gain market share given significant marketing power, an entrenched value perception, menu innovation and upgraded facilities. Accordingly, we are reiterating our BUY rating and view MCD as one of our top picks in the restaurant industry.” Morgan Stanley said that January was a banner month for MCD's sales, especially in the U.S., adding, “Europe and APEMA were strong but roughly in line. One small caveat as we head into Feb: while leap day adds about 3.2% in Europe, the recent cold snap there could adversely impact sales—albeit just temporarily. Jan sales collectively within the range of our estimates so no change to 1Q EPS just yet.” Goldman Sachs raised its price target to $114, saying that, “McDonald's reported January global SSS of 6.7%, which was above our 6.0% estimate and the 5.9% consensus. SSS were 7.8% in the US, 4.0% in Europe, 7.3%% in APMEA. We raise our above-consensus 2012-2014 EPS estimates to $5.85/$6.63/$7.45 from $5.81/$6.58/$7.39 to reflect higher SSS assumptions and the recent strength in the Euro.”