Posts by Chris Nichols

  • Here's McDonald's main worry, in one chart

    Chris Nichols at Yahoo Finance 2 hrs ago

    The biggest problem facing McDonald's (MCD), the one at the center of it all, is the fact that fewer customers are buying its Big Macs and other burgers.

    As discussed in an article last fall, what was likely to happen now has been confirmed: The chart above shows that McDonald's transaction counts, down in 2013, dropped again in 2014. These two consecutive decreases stand out because from 2003 through 2012, guest traffic had increased each year at the Golden Arches.

    Last year, traffic had a serious setback in the Asia-Pacific, Middle East and Africa region, which lost customers because of negative supplier news in China. However, transactions were down in all major regions. In Europe, they've declined three years in a row. In the U.S. and APMEA, it's been two years.

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  • McDonald's closes out a bad year with only hopes of better 2015

    Chris Nichols at Yahoo Finance 3 days ago

    McDonald's (MCD) had another depressed quarter to close out 2014, a year that was memorable often for the wrong reasons.

    Now its goal is to start seeing whether some of its many initiatives, from greater customization to technology enhancements, get the business turned around this year. So far, investors aren't full of confidence, with the stock trading down after an earlier gain. And company management is noting yet more worries from the outset.

    On Friday, the world's largest restaurant operator measured by market value and total sales said it earned $1.13 a share in the fourth quarter, including a deduction calculated at 9 cents for a supply problem in China that lowered Asia's sales last year. That fell from $1.40 in the 2013 fourth quarter. Revenue was right under $6.6 billion, down 7%, and global comparable sales fell 0.9%, as guest traffic counts dropped in all major regions. Not especially compelling, yet in some ways it could have been worse.

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    Not the best start

  • Starbucks shares get post-earnings boost

    Chris Nichols at Yahoo Finance 4 days ago

    Starbucks (SBUX) shares climbed late Thursday after it met analysts' profit and revenue estimates for the fiscal first quarter and posted same-store sales figures that were a bit better than forecast.

    The Seattle-based coffee seller, the second-largest U.S.-based restaurant measured by market cap, said revenue for the quarter rose 13% from last year to $4.8 billion, and adjusted earnings clocked in at 80 cents a share. Both were in line with FactSet consensus estimates.

    Global same-store sales, a key figure, climbed 5% from the year prior, slightly ahead of the 4.8% projection. Traffic, meanwhile, ticked up by 2%. In the Americas region, traffic also rose 2%, while same-store sales were up by 5%. Same-store sales gauge company-operated stores open 13 months or longer.

    Consumers put $1.6 billion on Starbucks Cards during the quarter, which covered the holiday shopping season, up 17% from the same time last year.

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  • So Starbucks does need more customers in those lines after all

    Chris Nichols at Yahoo Finance 5 days ago

    From the beginning of 2009 through the end of 2013, shares of Starbucks (SBUX) had a compound annual growth rate of 52.6%. In that time, the stock went from $9 to $78. Although the market was rallying tremendously, Starbucks outperformed it each time. It also was better than its industry, year after year.

    That changed in 2014, when the stock rose only 4.7%. It trailed the S&P 500, as well as comparable companies measured by FactSet. So far in the early days of 2015, what's been an unsettled few weeks for stocks overall, it's down 1% to about $81.

    Whether it remains sluggish or gets a renewed boost in the near term is going to depend on the first-quarter earnings report scheduled for after the close Thursday. Analysts are anticipating earnings of 80 cents a share on revenue of $4.8 billion. Same-store sales for the quarter, one that includes the holidays, are seen up 4.9%. While on the surface that's perfectly acceptable, that actually would be the worst comparable-sales result since the first quarter of 2010.

    Staying for dinner

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  • Shake Shack IPO: Like an Internet stock, only with burgers

    Chris Nichols at Yahoo Finance 6 days ago

    For Shake Shack, and for those who want to invest in Shake Shack, the wait for its IPO is almost over.

    The New York-based burger chain has provided more details on its pending initial offering, saying Tuesday that the Class A stock it's issuing, up to 5.75 million shares including the over-allotment option, probably will be priced between $14 and $16 a share, raising as much as $92 million.

    It's highly likely that will be only the beginning. Because of the anticipation surrounding Shake Shack -- with it being a well-known "better burger" name founded in New York by restaurant entrepreneur Danny Meyer -- it may in fact trade well above that quickly. And considering that other new restaurants of the fast-casual type mostly have been scooped up by investors, including another burger chain, California's Habit Restaurants (HABT), Shake Shack has the makings of a very sought-after stock.

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  • Yes, you ARE paying more for food

    Chris Nichols at Yahoo Finance 10 days ago

    The idea that there's no inflation might not make much sense to plenty of ordinary people.

    And yet, a report issued Friday by the Labor Department indicated that, when considered as a whole, the U.S. economy isn't seeing especially higher prices. In the past 12 months, the Consumer Price Index for all items rose 0.8%, below the year-over-year rate of 1.3% recorded in the November report and far under the 10-year average. The "core" rate, which leaves out food and energy price changes, was up 1.6% in the last 12 months. Not bad.

    Of course, it all depends on how you look at it. While it's the job of professional economists to study these things, regular folks normally aren't building spreadsheets. They're concerned with eating and driving, with all the daily thinking about the world's costs in a different way. That includes spending a lot of time noticing the items that are getting pricier, especially the necessary ones like food.

    --Beef and veal: Up 18.7%.

    --Dairy and related products: Up 5.3%.

    --Fruits and vegetables: Up 3.2%. Both fell in 2013.

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  • For McDonald's, it was a year to forget -- and 2015 might be the same

    Chris Nichols at Yahoo Finance 11 days ago

    In a few days, McDonald's (MCD) will detail what was a largely forgettable year for the company and its shareholders when it releases its 2014 financial results. Those results are almost assured of showing the type of disappointment that, until recently, had been unheard of at the Golden Arches.

    Undoubtedly, it also will spend ample time describing how its sandwich-customization plans, appreciation for technology and presumably less-crowded menu will be returning the world's largest restaurant chain to greatness in all ways. None of that will be especially new, so unless it unveils something astonishing to go along with the countless initiatives already known to be under way, 2015 probably won't be much different than the year just past.

    [Related: 3 key questions for McDonald's in 2015] Maligned at every turn

    [Related: Is the age of McDonald's over?]

  • Average household to save $750 this year from lower gas prices: Energy Dept.

    Chris Nichols at Yahoo Finance 13 days ago

    The Energy Department is predicting an average U.S. household will save $750 this year on gasoline costs compared with what was spent in 2014, according to its latest Short-Term Energy Outlook.

    With crude prices dropping fast, data from the Energy Information Administration show that weekly retail prices for regular gas averaged $2.14 a gallon as of Jan. 12. Prices haven't been that low since May 2009. For the first quarter, the EIA expects prices paid to average $2.16 a gallon, whereas the estimate for all of 2015 is $2.33 a gallon, which would be down more than $1 from $3.36 a gallon in 2014.

    In its first estimates for 2016, the EIA is forecasting a retail price for regular gas of $2.72 a gallon.

    Brent crude and West Texas Intermediate, the main oil futures contracts, have lost more than 50% from their highs of only a few months ago. The EIA now believes Brent will average $57.58 a barrel this year, then rise to $75 a barrel in 2016. WTI is estimated at $54.58 this year and $71 next year.

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  • Texas prepares for drop in oil-and-gas tax revenue

    Chris Nichols at Yahoo Finance 14 days ago

    Although Texas, the nation's largest oil producer, may see higher total tax revenue in the years ahead, the state's comptroller expects a decline in the energy sector's contribution.

    In the Biennial Revenue Estimate released Monday, Texas Comptroller Glenn Hegar detailed the state's projected funding through 2017, and the belief is that taxes from oil and gas will fall as production levels off and prices remain moderate. For the 2014-15 revenue cycle, oil production and regulation taxes are seen totaling $6.64 billion, but for 2016-17, that may drop more than 14% to $5.69 billion. Natural gas production taxes, estimated at $3.51 billion in 2014-15 combined, are forecast at $3.23 billion for 2016-17, an 8% decrease.

    As for several other components of state revenue, higher taxes are forecast. For instance, sales tax in 2016-17, the largest contributor to tax collections, is seen increasing by $5 billion. Texas, the nation's second-largest state economy behind California, doesn't have a state income tax for its residents.

  • Oil production chart shows the big shale boost for U.S.

    Chris Nichols at Yahoo Finance 17 days ago

    Chart data are in thousands of barrels per day. For 2014, the totals represent the monthly average from January through October.

    Oil's steep decline was headline news again Friday, as prices of the two primary crude futures contracts were seeing their lowest points in half a decade. As has been the case of late, traders were exiting a market they fear has too much supply to support higher levels.

    The chart above makes it clear that domestic oil production indeed has been surging in recent years, and the U.S. is now at around a three-decade high in terms of output. According to data from the Energy Department, 2014 appears poised to have seen the most crude production since 1986. Based on available information from January through October, American production averaged about 8.58 million barrels of crude a day, with Texas accounting for more than one-third of that, averaging 3.11 million barrels. That's nearly triple what it was four years ago in the Lone Star State.

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