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McDonald's (MCD) to Acquire Carlyle's Stake in Its China Operation
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McDonald's Corporation (MCD - Free Report) and Carlyle Group, a global investment firm, mutually agreed upon McDonald's acquiring the 28% ownership stake in the strategic partnership that operates and manages its business in mainland China, Hong Kong and Macau. Previously this minority ownership stake was held by Carlyle.
Post the completion of this strategic transaction, McDonald's will remain a minority partner while increasing its stake from 20% to 48% ownership. On the other hand, the China International Trust Investment Corporation (“CITIC”) Consortium will continue to own its controlling ownership stake of 52% in the China operation, through its private equity affiliate Trustar Capital (formerly known as CITIC Capital). The transaction is subject to customary regulatory approvals and is anticipated to close in the first quarter of 2024.
The company is optimistic about this transaction as it believes this strategic move will supply it with uncountable opportunities to leverage the increased demand pattern in its second-largest market. Also, this will help it to benefit from this fastest-growing market's long-term potential.
Post the announcement, the shares of this fast-food chain gained 1.2% during trading hours on Nov 20.
Notable Market Presence Drives Growth
McDonald’s offerings have reached the billion-dollar brand status through sustained product innovation and geographic expansion. The brand recognition has helped the company gain positive results in its Arches campaign strategies, especially Accelerating of Arches, initiated in its top markets across the globe, thus driving growth.
The successful execution of the Accelerating the Arches strategy is driving increased customer demand and market share gains across major markets. The company's performance reflects the passion and dedication of the entire McDonald's system, with global comparable sales reaching 8.8% and consistent segment results, indicating the brand's strength. The McDonald's brand's authenticity and relevance were highlighted in the third quarter of 2023 through customer engagement.
Geographically, in China, McDonald’s relaunched a campaign with small price-pointed bundles in the menu, featuring its hot delicious burgers. This resulted in driving meaningful customer demand and increased beef share in the market, despite ongoing slow macroeconomic conditions and historically low consumer sentiments.
Given the emphasis on digital initiatives, campaigns and loyalty programs, the company remains optimistic and anticipates the initiatives to drive sales and average checks in the upcoming periods.
Image Source: Zacks Investment Research
Shares of MCD have lost 3.6% in the last six months compared with the Zacks Retail - Restaurants industry’s 4.8% decline.
Zacks Rank & Key Picks
McDonald’s currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks that investors may consider from the Zacks Retail-Wholesale sector.
It has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has increased 46.3% in the past year. The Zacks Consensus Estimate for WING’s 2023 sales and earnings per share (EPS) suggests rises of 26.3% and 29.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) presently has a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has increased 4.5% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5% and a 26.2% rise, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 24.8%, on average. The stock has gained 8% in the past year.
The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS suggests an increase of 9.3% and 37.2%, respectively, from the year-ago period’s levels.
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McDonald's (MCD) to Acquire Carlyle's Stake in Its China Operation
McDonald's Corporation (MCD - Free Report) and Carlyle Group, a global investment firm, mutually agreed upon McDonald's acquiring the 28% ownership stake in the strategic partnership that operates and manages its business in mainland China, Hong Kong and Macau. Previously this minority ownership stake was held by Carlyle.
Post the completion of this strategic transaction, McDonald's will remain a minority partner while increasing its stake from 20% to 48% ownership. On the other hand, the China International Trust Investment Corporation (“CITIC”) Consortium will continue to own its controlling ownership stake of 52% in the China operation, through its private equity affiliate Trustar Capital (formerly known as CITIC Capital). The transaction is subject to customary regulatory approvals and is anticipated to close in the first quarter of 2024.
The company is optimistic about this transaction as it believes this strategic move will supply it with uncountable opportunities to leverage the increased demand pattern in its second-largest market. Also, this will help it to benefit from this fastest-growing market's long-term potential.
Post the announcement, the shares of this fast-food chain gained 1.2% during trading hours on Nov 20.
Notable Market Presence Drives Growth
McDonald’s offerings have reached the billion-dollar brand status through sustained product innovation and geographic expansion. The brand recognition has helped the company gain positive results in its Arches campaign strategies, especially Accelerating of Arches, initiated in its top markets across the globe, thus driving growth.
The successful execution of the Accelerating the Arches strategy is driving increased customer demand and market share gains across major markets. The company's performance reflects the passion and dedication of the entire McDonald's system, with global comparable sales reaching 8.8% and consistent segment results, indicating the brand's strength. The McDonald's brand's authenticity and relevance were highlighted in the third quarter of 2023 through customer engagement.
Geographically, in China, McDonald’s relaunched a campaign with small price-pointed bundles in the menu, featuring its hot delicious burgers. This resulted in driving meaningful customer demand and increased beef share in the market, despite ongoing slow macroeconomic conditions and historically low consumer sentiments.
Given the emphasis on digital initiatives, campaigns and loyalty programs, the company remains optimistic and anticipates the initiatives to drive sales and average checks in the upcoming periods.
Image Source: Zacks Investment Research
Shares of MCD have lost 3.6% in the last six months compared with the Zacks Retail - Restaurants industry’s 4.8% decline.
Zacks Rank & Key Picks
McDonald’s currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks that investors may consider from the Zacks Retail-Wholesale sector.
Wingstop Inc. (WING - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
It has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has increased 46.3% in the past year. The Zacks Consensus Estimate for WING’s 2023 sales and earnings per share (EPS) suggests rises of 26.3% and 29.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) presently has a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has increased 4.5% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5% and a 26.2% rise, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 24.8%, on average. The stock has gained 8% in the past year.
The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS suggests an increase of 9.3% and 37.2%, respectively, from the year-ago period’s levels.