Can McDonald's Maintain Its Strong 1Q16 Momentum?
McDonald’s (MCD) reported its 1Q16 results on April 22, 2016. The company posted revenue of $5.9 billion and EPS (earnings per share) of $1.23. Compared to 1Q15, its revenue declined by 0.9% while EPS grew by 21.8%.
Since the implementation of its reorganization strategy, the share price of McDonald’s is on the rise. The company delivered returns of 26.1% in 2015. Year-to-date, the company’s share price has risen by 6.2%. Since the beginning of 2016, McDonald’s peers YUM! Brands (YUM), Domino’s Pizza (DPZ), and Starbucks (SBUX) have delivered returns of 11.1%, 19%, and -3.9%, respectively. During the same period, the broader comparative index, the Guggenheim S&P 500 Pure Growth ETF (RPG), which has invested more than 44% of its holding in restaurant and travel companies, has declined by 1%.
Although McDonald’s 1Q16 results were better than expected, the share price declined by 0.22% due to weakness in the broader market. Taking cues from major European markets, which were hit by scandals involving multiple automakers, the NASDAQ Composite (IXIC) ended April 22, 2016, down by 0.8%.
In this series, we’ll discuss the 1Q16 earnings call and notes along with McDonald’s performance on key metrics during the quarter. We’ll also cover the management’s guidance and analysts’ estimates for the rest of 2016 and beyond.
Let’s start by seeing why McDonald’s revenue declined in 1Q16.
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