McDonald’s Corp. MCD, a major fast-food restaurant chain, said on Tuesday that first-quarter global comparable sales increased 5.4%, the 15th consecutive quarter of positive same-store sales growth according to CEO Steve Easterbrook.
Even though consolidated revenue declined 4% year over year, net sales of $4.96 billion still outperformed the analyst estimate of $4.93 billion.
Same-store sales increased even though net revenue declined
Easterbrook and Chief Financial Officer Kevin Ozan said during the earnings call that U.S. same-store sales increased 4.5% year over year on several factors, including the Bacon Event, the 2 for $5 Mix and Match Deal and Donut Sticks. Easterbrook highlighted positive customer responses to the Bacon Event in countries like Canada, the U.K. and Russia, contributing to 6% year-over-year comp sales growth in international markets. Despite this, consolidated revenue declined 4% as heavier refranchising costs offset the strong same-store sales growth.
Company profitability lags competitors like Ackman’s Chipotle and Restaurant Brands
Table 1 lists key profitability metrics for McDonald’s and competitors like Bill Ackman (Trades, Portfolio) holdings Chipotle Mexican Grill Inc. CMG, Starbucks Corp. SBUX and Restaurant Brands International Inc. QSR.
| Company | Revenue (Mil) | Profitability | Piotroski F-Score | ROIC % | Operating Margin % | ROA % | 3y Revenue Growth |
| McDonald's Corp MCD | 21,025 | 6 | 6 | 27.7 | 40.84 | 17.73 | -0.2 |
| Starbucks Corp. SBUX | 25,553 | 7 | 5 | 54.45 | 14.59 | 15.56 | 11.9 |
| Yum Brands Inc. YUM | 5,688 | 5 | 5 | 75.63 | 30.75 | 33.88 | 6.1 |
| Chipotle Mexican Grill Inc. CMG | 5,025 | 8 | 7 | 31.28 | 6.85 | 7.69 | 6.8 |
| Yum China Holdings Inc. YUMC | 8,415 | 7 | 7 | 40.12 | 9.86 | 15.25 | 6.3 |
| Restaurant Brands International Inc QSR | 7,038 | 9 | 7 | 10.53 | 36.18 | 2.97 | 9.2 |
Table 1
As Table 1 illustrates, McDonald’s’ profitability ranks 6 out of 10, lower than that of Chipotle and Restaurant Brands. Although the company's profit margins are outperforming over 95% of global competitors, its revenue has declined 0.2% on a per-share basis and 6.10% on a total revenue basis, rates that are underperforming 69% of global restaurants.
Gurus with large holdings in McDonald’s include Pioneer Investments (Trades, Portfolio), Spiros Segalas (Trades, Portfolio) and Jim Simons (Trades, Portfolio).
Disclosure: No positions.
Read more here:
- Google Parent Alphabet Falls on Revenue Deceleration in 1st Quarter
- Buffett’s American Airlines Nosedives on 1st-Quarter Earnings Miss
- Amazon Dips on Lower 1st-Quarter Revenue Growth
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
Also check out:- Bill Ackman Undervalued Stocks
- Bill Ackman Top Growth Companies
- Bill Ackman High Yield stocks, and
- Stocks that Bill Ackman keeps buying
- Pioneer Investments Undervalued Stocks
- Pioneer Investments Top Growth Companies
- Pioneer Investments High Yield stocks, and
- Stocks that Pioneer Investments keeps buying
