McDonald’s (MCD) released a fourth-quarter profit on Thursday that fell short of Wall Street expectations, but the fast food giant saw sales increase with COVID-19 trends in menu innovation, take-out and mobile orders.
Here’s what the Chicago-based fast-food restaurant posted, compared to Wall Street expectations, according to a Bloomberg consensus estimate:
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Recipe: $ 5.31 billion versus expected $ 5.37 billion
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Adj. earnings per share (EPS): $ 1.70 against expected $ 1.77 per share
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Same store sales in the USA: 5.5% against expected 4.89%
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Same store international sales: -1.3% against -4.32% expected
The Golden Arches said sales in the United States were driven by an increase in the average size of checks, leading to “positive comparable sales” that were linked to “strategic marketing investments and promotional activity” for new menu items.
McDonald’s President and CEO Chris Kempczinski said “2020 will be remembered as one of McDonald’s most challenging but inspiring moments in our long history. The resilience of the McDonald’s system was on display – making safety and service a priority , putting our customers and people first, and running great restaurants. “
On Monday, the home of Big Mac and Quarter Pounder, announced that Spicy Chicken McNuggets and Mighty Hot Sauce are making a comeback for a limited time, starting on February 1. And on February 24, McDonald’s will enter the chicken sandwich war with three different versions of the crispy chicken sandwich: classic, deluxe and spicy.
Wall Street and Main Street are also gathering around the early launch of McPlant, a vegetable burger, created by and for the fast food chain.
Like many restaurant chains, McDonald’s has kept sales afloat by innovating the menu and switching aggressively to mobile orders, which allow customers to order in advance – then pick up the food and leave.
“By investing in the future and leveraging competitive forces within our drive-thru arc delivery strategy, delivery and our growing digital presence, we are confident that we can continue to capture market share and drive long-term sustainable growth for all the stakeholders, ”said McDonald’s President and CEO Chris Kempczinski on Thursday.
And after a year focused mainly on digital, delivery and drive-thru, analysts are optimistic about the fast-food giant’s long-term recovery.
JP Morgan analyst John Ivankoe noted on Monday that McDonald’s is “well capitalized” and well positioned to recover in the post-COVID era, “as evidenced by an almost record 12% gain in comparable sales posted in September 2020. “
When compared to other similar fast food giants like Brands (YUM), Starbucks (SBUX) and Dominos (DPZ), Golden Arches’ rating is comparatively better, noted Ivankoe.
JP Morgan remains overweight in McDonald’s shares, with a 12-month price target of $ 215. “We believe that valuing McDonald’s should be long-term in nature,” added the analyst.
In a recent note, RBC Capital Markets analyst Christopher Carril said he is looking at “relative changes in sales trends” and pedestrian traffic – including those from other giants like Restaurant Brands International (QSR), Wendy’s (WEN) and YUM!
For McDonald’s in the fourth quarter, he will also seek “the momentum carried over to the beginning of the third quarter, with revenue from continuing to promote celebrity meals and McRib.”
In December, he considered exactly that.
“I think McDonald’s did a good job of driving sales with McRib with better marketing … there will be a good catalytic path until at least the first part of 2021,” said Dennis Geiger, a restaurant analyst at UBS, to the Yahoo Finance Live. month.
“So from a sales standpoint, there will be good numbers that you will see with them,” he added.
BTIG analyst Peter Saleh of BTIG is also eyeing the menu innovation. In a November note, he reiterated the company’s “Buy” rating and $ 245 price target, with a nod to new menu items like McPlant, McRib and crispy chicken.
McDonald’s shares, which closed at a low of $ 207.83 on Wednesday, fell modestly in the premarket.
Brooke DiPalma is a producer and reporter at Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.
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