McDonald's May Sales: I'm Lovin' It

by: Todd Sullivan June 11, 2008 | about stocks: MCD    
Todd Sullivan

Todd Sullivan

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Lost in the Lehman (LEH), Apple (AAPL) and Oil (USO) hysteria on Monday was the fact that McDonald's (MCD) turned in another undeniably fantastic month.

McDonald’s said on Monday that global sales in May were up a whopping 7.7% at established restaurants. Same-store sales, rose 4.3% at American McDonald’s restaurants open at least 13 months.

Analysts’ average call was for an increase of 1%. Same-store sales rose 9.6% in Europe, led by strength in Britain, France and Russia, and 9.7% in the Asia/Pacific, Middle East and Africa division.

McDonald's Chief Executive Officer Jim Skinner said, "We're committed to providing our customers with compelling value, unique menu variety and unparalleled convenience. Our steadfast focus on the customer experience and our alignment behind the Plan to Win continue to deliver positive results worldwide."

Anyone want to bet the company will surpass analyst estimates for Q2 results on July 23, 2008?

Would I run out an buy shares now? At 27 times current EPS and almost 16 next year, I would say not really. If I owned them would I sell? I do, and I will not be. I intend to ride the wave here much longer. I do not see conditions occurring either in the economy or in its industry in terms of competition that would cause the momentum it has to unwind.

I expect McDonald's' value proposition to remain enticing for customers as the economy stays sluggish for quite some time.  As for the competition, well, they are simply trying to catch up now.


Disclosure: Long MCD

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This article has 3 comments:

  •  
    Jun 11 05:52 AM
    EU sales up 9.6% while USD is down 16% vs. EURO, Asian sales up 9.7% while USD down 11% vs. YEN. What is there to 'lovin' in it when sales in local currency decline?
    Reply | Link to Comment
  •  
    Jun 11 11:29 AM
    I was talking abou this long before anyone else and they have delivered. See all my commentary at lompie.blogspot.com
    Reply | Link to Comment
  •  
    Jun 11 12:55 PM
    baychev,

    When MCD brings the profits from EU and Japan back home, they get to trade those yen and euros for more dollars. If the dollar strengthens in the future, cut back on US companies selling overseas and increase positions on overseas comapnies selling in the US.
    Reply | Link to Comment
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