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McDonald's Hits 11-Month High As February Sales Top Targets

McDonald's (MCD) reported better-than-expected February sales, sending shares to an 11-month high Friday.

The world's biggest restaurant chain said global sales at established restaurants fell 1.5% vs. a year earlier, less than the 1.63% drop that analysts had expected. But comparable sales actually rose 1.7% after adjusting for February 2012's extra day due to the leap year, McDonald's said.

Shares rose nearly 2% to 98.71 on the stock market Friday. That's the best since April 2012.

Same-store sales in the U.S. fell 3.3% — flat adjusted for the leap year. Europe's comps fell 0.5% — up 2.7% adjusted. Asia/Pacific, Middle East and Africa dipped 1.6% — up 1.5% adjusted).

"We remain confident in the fundamental strength of McDonald's business," President and CEO Don Thompson said in a statement.

McDonald's had said March 1 it will drop its Fruit & Walnut Salad and Chicken Selects from U.S. menus. It's still mulling whether to keep its "premium" Angus burgers.

The moves come as rivals Burger King Worldwide (BKW) and Wendy's (WEN) have followed their larger rival's lead in expanding menus.

McDonald's shares enjoyed a strong run from early 2009 to early 2012. But they sold off for much of last year, hitting an intraday low of 83.31 on Nov. 16.

That came amid weaker financial results. After double-digit earnings per share gains in every quarter of 2010 and 2011, McDonald's reported EPS year-over-year changes in 2012 of 7%, -2%, -1% and 4%.

For Q1, analysts expect EPS to rise 3% to $1.27, with sales edging up 1% to $6.63 billion. But Wall Street sees 8%-11% gains in subsequent quarters.

McDonald's February sales are evidence that consumer spending at restaurants is holding up.

The Retail-Restaurants group is ranked 63 on IBD's list of 197 industry groups, up from a middling 92 rank eight weeks ago and 136 a quarter ago.

Elsewhere in the group, Yum Brands (YUM), No. 2 by sales, rose less than 1%. Shares have been trending higher since hitting a 52-week low Feb. 5. That nadir came as the parent of KFC, Taco Bell and Pizza Hut chains warned that ongoing food safety concerns were badly hurting KFC sales in China.

Burger King and Wendy's shares also rose less than 1%.