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McDonald's to Expand Footprint With 25 Restaurants in Italy

Zacks Equity Research

McDonald's Corporation MCD is likely to open 25 restaurants in Italy this year to attract more customers, per Reuters. Notably, McDonald's is the world’s largest fast-food restaurant chain with presence in more than 100 countries.

In 2019, the company is planning to hire 2,300 staff in Italy, after adding 3,000 workers therein over the past two years. Increasing guest counts remains McDonald's top priority. Additionally, it is making efforts to strengthen its position through various sales building initiatives along with increased focus opening new restaurants.

We believe that the company’s decision to open restaurants in Italy will not only boost sales and traffic but will also pave the way for long-term growth. Of late, McDonald's has been gaining from robust business in Italy.

In the International Lead segment and High Growth markets, McDonald’s strategic efforts are consistently driving comps higher. In fourth-quarter 2018, the International Lead segment and High Growth markets witnessed comps growth of 5.2% and 4.8% each, following a respective gain of 5.4% and 4.6% in the third quarter. Comps growth in international markets was driven by robust sales in the United Kingdom, Australia and France. In High Growth markets, improvement in comps can be attributed to solid performance in Italy, Poland, the Netherlands as well as positive results across majority of the segments.

McDonald’s sales boosting initiatives are driving global comparable sales (comps). In fourth-quarter 2018, global comps grew 4.4%, marking its 14th straight quarter of positive comps. Moreover, U.S comps were up 2.3% in the same period.

A glance at the company’s price performance shows that it has gained 21% in a year’s time, almost in line with the industry’s growth. Robust earnings surprise history, various sales and digital initiatives as well as positive comparable sales were the primary reasons behind this solid show.



Zacks Rank & Key Picks

McDonald’s has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include Brinker International, Inc. EAT, Chipotle Mexican Grill, Inc. CMG and Darden Restaurants, Inc. DRI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brinker International, Chipotle Mexican Grill and Darden Restaurants’ current-year earnings are likely to grow by 10%, 37.1% and 20.2%, respectively.

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