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McDonald's Posts Improved Q3 US Comps, Declares Dividend Hike

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McDonald's Corporation (MCD - Free Report) recently provided comparable restaurant sales for the third quarter ended Sep 30, 2020. Notably, the company’s sales remain strong on the back of its worldwide drive-thru presence, a strong digital and delivery system as well as marketing capabilities. Moreover, to boost investors’ confidence, the company has announced a dividend hike.

Comparable Sales

During the third quarter of 2020, comparable sales in the U.S. segment grew 4.6% year over year compared with 4.8% growth reported in the prior-year quarter. In second-quarter 2020, comparable sales in the U.S. segment declined 8.7%. Notably, the segment’s comparable sales witnessed sequential improvement throughout the third quarter on the back of strong average check growth and dinner performance. Moreover, the company witnessed low-double-digit comparable sales in September due to its marketing investments and related promotional activities.

During the third quarter, comparable sales in the International Operated Markets segment were down 4.4% against growth of 5.6% reported in the previous year’s quarter. Notably, the segment witnessed negative comparable sales in France, Spain, Germany and the United Kingdom, partly offset by positive comparable sales in Australia. Although government regulations have negatively impacted the recovery, the segment witnessed sequential improvement throughout the third quarter on the back of positive consumer sentiments.

In the International Developmental Licensed Markets & Corporate segment, comparable sales fell 10.1% during the third quarter against 8.1% growth reported in the year-ago quarter. Despite sequential improvement throughout the third quarter, the segment witnessed a decline in comparable sales in Latin America and China, partly offset by positive comparable sales in Japan.

However, the company’s overall comparable sales were down 2.2% in the quarter against growth of 5.9% recorded in the prior-year quarter.

Dividend Updates

In a bid to restore investors’ confidence in the McDonald’s business amid the ongoing pandemic, the company has announced a 3% rise in its quarterly dividend payment. Notably, the quarterly amount of $1.29 per share (or $5.16 annually) will be paid out to shareholders of record at the close of the business on Dec 1. The dividends are payable on Dec 15, 2020.

In this regard, McDonald's president and chief executive officer Chris Kempczinski stated, "Today's dividend increase reflects our strong financial position and represents continued confidence in our ability to drive profitable growth and long-term shareholder value while still investing in our people and the business."

Notably, management is confident about emerging from the pandemic with competitive strength. So far this year, shares of the company have gained 14.3% compared with the industry’s 7.8% growth.

Zacks Rank & Key Picks

McDonald's currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include BJ's Restaurants, Inc. (BJRI - Free Report) , Chuy's Holdings, Inc. (CHUY - Free Report) and Brinker International, Inc. (EAT - Free Report) , each sporting a Zacks Rank #1.

BJ's Restaurants has a three-five-year earnings per share growth rate of 15%.

Chuy's Holdings has a trailing four-quarter earnings surprise of 87.3%, on average.

Brinker’s 2021 earnings are expected to grow 20.5%.

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