Fast-food chain McDonald’s Corp. (MCD, Financial) reported strong fourth-quarter and full-year 2017 earnings before the market opened on Tuesday.
The Oak Brook, Illinois-based company reported net income fell 41% to $689.7 million, or 87 cents per share, from the prior-year quarter as a result of the Tax Cuts and Jobs Act. Adjusted earnings per share of $1.71, though, beat Thomas Reuters’ estimates of $1.59.
Quarterly revenue of $5.34 billion beat estimates of $5.22 billion but decreased 11% from the prior-year quarter due to the company’s refranchising initiative.
Global same-store sales for the quarter increased 5.5%, beating estimates of 4.9% growth. In the U.S., same-store sales climbed 4.5%, topping estimates of 4.3%, as consumers enjoyed McDonald’s national cold beverage value promotion, which offered soft drinks for $1 and McCafe beverages for $2, as well as its McPick 2 deal, delivery services and the addition of Buttermilk Crispy Tenders to the menu.
Despite the beat, shares fell in premarket trading following the announcement.
For the year, the restaurant chain posted adjusted earnings of $6.66 per share on $22.82 billion in revenue. Same-store sales for the year grew 5.3%, which, according to President and CEO Steve Easterbrook, marked the company’s best comparable sales performance in six years.
"2017 was a strong year for McDonald's as customers responded to the many ways we are making their experience more convenient and enjoyable,” he said in a statement.
Looking ahead, McDonald’s said it plans to invest $2.4 billion in revamping and modernizing its existing locations as well as open 1,000 new restaurants in 2018.
“At the same time, we plan to continue making meaningful investments in technology to modernize the customer experience and redefine convenience,” Chief Financial Officer Kevin Ozan said. “I'm confident that now is the opportune time to strategically invest in our business and our restaurants to drive profitable growth and become an even better McDonald's."
Easterbrook also commented on the year ahead: “With the commitment the McDonald's system has to running great restaurants and maximizing our growth initiatives, we are confident that we will accelerate our momentum by capitalizing on our strong business model and distinct brand advantages in convenience, menu variety and value."
In addition, McDonald’s announced its dividend for the first quarter of 2018. The company will pay a cash dividend of $1.01 per share on March 15 to shareholders of record as of March 1.
Shortly after the opening bell on Tuesday morning, McDonald’s shares were down 1.07% at $175.87. GuruFocus estimates the stock gained approximately 42% in 2017. Year to date, it is up 2%.
Disclosure: I do not own any stocks mentioned.
