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McDonald's CEO Bullish Despite All-Day Breakfast Slump
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On Monday, iconic fast food chain McDonald’s Corp. (MCD - Free Report) released its fourth quarter fiscal 2016 financial results, beating expectations on both the top and bottom lines.
Earnings per share came in at $1.44, surpassing the Zacks Consensus Estimate of $1.41 per share (investors should note that these figures take out stock option expenses); net income was $1.19 billion, down 1% from the prior year period. Revenues came in at $6.03 billion, also beating our consensus estimate of $5.98 billion but falling 5% year-over-year.
McDonald’s reported a same-store sales decline of 1.3%, suggesting the popularity of its All-Day Breakfast menu may be waning. About a year ago, the company reported a 5.7% surge in comps thanks to its breakfast strategy, but it looks like that was a temporary boost. Internationally, McDonald’s same-store sales fared much better, rising 2.7% in Q4.
CEO Steve Easterbrook does not appear to be worried though. In fact, he’s actually pretty bullish. “I'm confident that we are well-positioned to transition to a longer-term focus in 2017. Our refranchising efforts and financial discipline will enable us to direct our capital and G&A resources towards new strategic opportunities to deliver on our long-term strategy,” he said in the company’s earnings release.
Now that its All-Day Breakfast initiative is such a huge success for the company, what’s next for McDonald’s? The burger chain has been constantly revamping its menu—using buns that no longer contain high fructose corn syrup, using chicken not treated with antibiotics, multiple Big Mac sizes, and switiching to cage-free eggs, among many others—but it will need another campaign like All-Day Breakfast, especially as competition in fast food gets hotter and hotter.
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McDonald's CEO Bullish Despite All-Day Breakfast Slump
On Monday, iconic fast food chain McDonald’s Corp. (MCD - Free Report) released its fourth quarter fiscal 2016 financial results, beating expectations on both the top and bottom lines.
Earnings per share came in at $1.44, surpassing the Zacks Consensus Estimate of $1.41 per share (investors should note that these figures take out stock option expenses); net income was $1.19 billion, down 1% from the prior year period. Revenues came in at $6.03 billion, also beating our consensus estimate of $5.98 billion but falling 5% year-over-year.
McDonald’s reported a same-store sales decline of 1.3%, suggesting the popularity of its All-Day Breakfast menu may be waning. About a year ago, the company reported a 5.7% surge in comps thanks to its breakfast strategy, but it looks like that was a temporary boost. Internationally, McDonald’s same-store sales fared much better, rising 2.7% in Q4.
CEO Steve Easterbrook does not appear to be worried though. In fact, he’s actually pretty bullish. “I'm confident that we are well-positioned to transition to a longer-term focus in 2017. Our refranchising efforts and financial discipline will enable us to direct our capital and G&A resources towards new strategic opportunities to deliver on our long-term strategy,” he said in the company’s earnings release.
Now that its All-Day Breakfast initiative is such a huge success for the company, what’s next for McDonald’s? The burger chain has been constantly revamping its menu—using buns that no longer contain high fructose corn syrup, using chicken not treated with antibiotics, multiple Big Mac sizes, and switiching to cage-free eggs, among many others—but it will need another campaign like All-Day Breakfast, especially as competition in fast food gets hotter and hotter.
Stocks that Aren't in the News…Yet
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015, with a stellar average gain of +26% per year. See these high-potential stocks now>>