McDonald & # 039; s Stock Has Momentum as Turnaround Plans Gain Traction

Last month, when McDonald's (NYSE 🙂 reported, they posted 4.4% growth in total sales in the same store, outperforming the average of 4% of analysts' estimates. The results were achieved during a difficult period for fast food restaurants and provide reassuring evidence that the global restaurant giant is in control.

The current environment for fast food restaurants is a challenge; the industry sees threats to the growth of changing consumer preferences, because customers are increasingly looking for healthier options and cutting back on junk food, while technology interrupters that make home supply more affordable and have become a first choice for many millennials reduce retail traffic.

In addition, the restaurant business is a constant work in progress. Investors who are hungry for any growth and steadily increasing dividend income should be very selective when buying shares from companies that operate large global food chains. McDonald's does a lot of things to keep its growth momentum strong in comparison with competitors.

MCD Weekly 2016-2019

The successful strategy of the company also rewards loyal investors, who have seen the share rise by 10% last year. The shares rose yesterday by 2.3% to $ 179.97 at close of the market and have upward potential of 10% according to analysts' forecasts for the next 12 months

McDonald & # 39; s has control of his fate

McDonald & # 39; s has surpassed earnings expectations in all quarter levels since 2015. Comparable sales, or sales at stores that were open for at least 13 months, increased by 2.3% in the fourth quarter in the United States. Global growth was much stronger. Comparable sales in restaurants at the top of global jurisdictions, including the UK, Europe and Australia, increased by 5.2% in the last quarter.

This winning streak is impressive, especially compared to other large worldwide fast-food operators. For example, coffee giant Starbucks (NASDAQ 🙂 is struggling to attract more customers to its vast network of coffee shops and is betting on China, where competition from smaller players is escalating.

For McDonald's, there is one concern to keep some investors on the sidelines, or Big Mac will be able to keep this winning streak in the face of some strong headwinds. Economic growth slows in China and Europe, while escalating labor costs and increased competition in the US have the potential to harm McDonald's future growth

But in our opinion, the owner of Golden Arches is still one of the best defensive bets to play the economic uncertainty.

As part of CEO Steve Easterbrook's strategy, McDonald's has regained market share through a variety of initiatives, including all-day breakfast offerings, menu innovation, such as healthier food choices, as well as better quality ingredients and improvements to the overall restaurant experience.

The refurbishment of his stores was an important part of Easterbrook's driving force to attract more customers. The $ 6 billion plan to overhaul most of the 14,000 American restaurants was designed to give visitors a fresh and modern look with digital kiosks, new furniture and décor

These efforts have undoubtedly kept McDonald's ahead of the game and fueled the gains in its shares, which have consistently defeated the broader market over the past five years. The shares have yielded a return of 86%, including dividends, during that period compared to 50% profit from Index.

McDonald's is a good bet for long-term earnings investors who want to take advantage of the growing cash flows of the citizen chain. Last September, the company increased its dividend by 15%, pushing it to $ 1.16 per share every quarter, up $ 1.01. The payout ratio is a very healthy 39.4. This was the 42nd year in which McDonald & # 39; s had an annual increase in the dividend

Short overview

We believe that the growth dynamics of McDonald's will help the company continue its generous payout policy. At the current price this translates into an annual dividend yield of 2.64%. If you are looking to add a high-quality revenue source to your portfolio, the timing will look good to consider MCD.

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