McDonald's (MCD) on Wednesday reported better-than-expected fourth-quarter earnings. Same-store sales growth was the strongest in 10 years for the Dow Jones fast-food giant. McDonald's stock rose soon after the open, working toward a buy point.
XMcDonald's Earnings
Estimates: Wall Street expected McDonald's earnings per share to come in at $1.96, down 1%, according to Zacks. Revenue for the burger chain was forecast to rise 3% to $5.3 billion.
Consensus Metrix forecast McDonald's same-store sales to rise 5.3% overall, and 4.7% in the U.S.
Results: McDonald's earnings edged down to $1.97 a share. Revenue rose 3.7% to $5.35 billion. Global same-store sales jumped 5.9%, the best in 10 years. U.S. comps popped 5.1%.
The McDonald's earnings report comes out as the outbreak of a coronavirus in China weighs on markets. The chain closed some stores in China as the virus infects more people there. More than 100 have died in China and thousands of cases have been reported, including five in the U.S.
Stock: Shares rose 1.9% to 214.41 on the stock market today, working on a cup base with a 222.03 buy point. McDonald's stock has a 64 Composite Rating and an EPS Rating of 72. The relative strength line has fallen since August, meaning it is lagging the S&P 500.
McDonald's stock dropped in October after the chain's U.S. same-store sales fell short of estimates. Shortly after, Steve Easterbrook, the company's CEO, was fired due to a consensual relationship with an employee. Chris Kempczinski took Easterbrook's place at the helm.
Burger King parent Restaurant Brands International (QSR) climbed 3 cents to 62.82 on Wednesday.
First McDonald's Earnings For New CEO
The Q4 McDonald's earnings report is the first one for Chris Kempczinski as CEO. He took over in November, when Steve Easterbrook was ousted for violating company policy by engaging in a relationship with an employee.
Easterbrook had led McDonald's as it became a more digital company, rolling out mobile ordering, a delivery partnership with Uber Eats and AI technology. But the chain also faced slowing customer traffic as competition intensified and the fast-food industry matured.
McDonald's has faced more competition from rivals offering combo deals similar to its 2 for $5 offering. Wendy's (WEN) plans to start serving breakfast nationwide next year, the latest shot fired in an intensifying battle for morning commuters.
After sitting out the Popeyes-dominated Chicken Sandwich Wars over the summer, McDonald's on Tuesday said it would add two chicken sandwiches to its breakfast menu. It also said it was testing a new Crispy Chicken Sandwich in Houston and Knoxville.
McDonald's faces bigger problems than Popeyes. Eighty-nine percent of McDonald's franchisees said they were "losing the most chicken market share" to Chick-fil-A, according to a survey from Kalinowski Equity Research.
"This mirrors our belief that Chick-fil-A is the largest competitive threat McDonald's U.S. faces," analyst Mark Kalinowski said in a note describing the survey findings. "With a lot of whitespace in the Midwest and Northeast, Chick-fil-A's unit expansion is likely to remain robust for years to come," he added.
McDonald's also recently said it would expand a test of a plant-based burger patty made by Beyond Meat (BYND) in Canada. But a Bernstein analyst said the trial did not appear to be a "blowout success thus far that justifies an immediate nationwide rollout across both Canada and the U.S."
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