Market Overview

McDonald's Q3 Shows Some Concerning Trends

McDonald's Q3 Shows Some Concerning Trends

McDonald's Corporation (NYSE: MCD) reported on Friday third-quarter results, which sufficiently satisfied investors' appetite to the point where shares gained more than 2 percent.

According to Gadfly's Shelly Banjo, investors are treating McDonald's stock like filet mignon as opposed to what it really is — a Filet-O-Fish.

Even though McDonald's has now delivered five consecutive quarters of positive comparable-store sales, growth in the United States is slowing. Specifically, comparable-store sales grew 5.7 percent in the fourth quarter of 2015, 5.4 percent in the first quarter of this year, 1.8 percent in the second quarter and most recently 1.3 percent in the third quarter.

Granted, McDonald's is outperforming the broader Bloomberg Intelligence restaurant index, but the fast food chain will also face the same challenges the rest of the industry sector is suffering from — consumers swapping fast food takeout for grocery store items.

Related Link: Investors Cheer McDonald's Q3 Results

Banjo noted that McDonald's real test will play out in the fourth quarter when sales will lap the roll-out of McDonald's All Day Breakfast offering. If comparable sales turn negative in the coming quarter, then it will be a sign that McDonald's is low on options to spur growth.

McDonald's management team isn't hiding the fact that the company's outlook isn't that exciting. Management already acknowledged that they aren't expecting much sales growth in the near-term and investors are baking this in to the stock, which is trading at 18 times forward earnings, a discount to its two-year average of around 20.

Yet if McDonald's under-promises and over-performs at a time when its restaurant peers are struggling, then that could prove to be enough to keep investors happy.

At last check, McDonald's was up 3.14 percent on the day at $114.01.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!


Related Articles (MCD)

View Comments and Join the Discussion!

Posted-In: Earnings News Guidance Restaurants Movers Media Trading Ideas General Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at