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McDonald's (MCD) Rides on Robust Global Comps Amid Supply Woes
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McDonald's Corporation (MCD - Free Report) is benefiting from robust comps growth, expansion efforts, and increased focus on drive-thru, delivery & take-away. The launch of its first-ever loyalty program in the United States bodes well. In the past six months, the company’s shares have gained 14.4%, compared with the industry’s growth of 13.1%. However, supply disruption in the U.K. due to shortage of truck drivers is a concern.
Key Catalysts
After reporting dismal comps in the trailing four quarters due to the coronavirus pandemic, the company posted robust comps in first and second-quarter 2021. In the quarter, global comps advanced 40.5% against a decline of 23.9% in the prior-year quarter. In the second quarter, comps at the United States, international operated markets and international developmental licensed segment rose 25.9%, 75.1% and 32.3%, respectively.
McDonald’s believes that there is a huge opportunity to grow all its brands globally by expanding presence in existing markets and entering new ones. The company’s expansion efforts continue to drive performance. Despite the pandemic, it opened about 500 restaurants across the market in 2020. The company is planning to open more than 1,300 restaurants globally in 2021. In China, it surpassed the 4,000 restaurants mark in June and is on track to open 500 new restaurants in the country this year.
The company is focusing on delivery program to drive sales. In the United States, 95% of its restaurants provide drive-thru facility. Over the past year, delivery sales mix has doubled in Australia, Canada and the United States. It announced that across its major six markets, digital sales crossed $10 billion or nearly 20% of system-wide sales in 2020. During first-half 2021, the company recorded approximately $8 billion in digital sales in its top six markets, reflecting a gain of 70% compared with last year.
Recently, McDonald's launched its first-ever loyalty program in the United States. It is worth mentioning that the company started testing its loyalty program in November last year. The company announced that MyMcDonald’s Rewards is available via the McDonald’s app nationwide.
Image Source: Zacks Investment Research
Concerns
McDonald's is currently grappling with supply disruption in the U.K. Consequently, it has removed milkshakes from its menu across all 1,250 of its British restaurants. The company informed that it is facing scarcity of bottled drinks as well. McDonald’s issued the following statement, “Bottled drinks and milkshakes are temporarily unavailable in restaurants across England, Scotland and Wales.”
Although overall comps have increased sharply, it is still well below the pre-pandemic level in few markets. In France and Germany, comp sales were still below 2019 levels in second-quarter 2021. However, the company has reopened indoor dining in both France and Germany in June though few restrictions are still in place. In China, comps sales were robust during second-quarter 2021 but still below the pre-pandemic level due to COVID resurgence in Southern China.
Some better-ranked stocks in the same space include Papa John's International, Inc. (PZZA - Free Report) , Jack in the Box Inc. (JACK - Free Report) and The Wendy's Company (WEN - Free Report) , each carrying a Zacks Rank #2 (Buy).
Papa John's 2021 earnings are expected to increase 122.9%.
Jack in the Box has a three-five year earnings per share growth rate of 17%.
Wendy's has a trailing four-quarter earnings surprise of 24.8%, on average.
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McDonald's (MCD) Rides on Robust Global Comps Amid Supply Woes
McDonald's Corporation (MCD - Free Report) is benefiting from robust comps growth, expansion efforts, and increased focus on drive-thru, delivery & take-away. The launch of its first-ever loyalty program in the United States bodes well. In the past six months, the company’s shares have gained 14.4%, compared with the industry’s growth of 13.1%. However, supply disruption in the U.K. due to shortage of truck drivers is a concern.
Key Catalysts
After reporting dismal comps in the trailing four quarters due to the coronavirus pandemic, the company posted robust comps in first and second-quarter 2021. In the quarter, global comps advanced 40.5% against a decline of 23.9% in the prior-year quarter. In the second quarter, comps at the United States, international operated markets and international developmental licensed segment rose 25.9%, 75.1% and 32.3%, respectively.
McDonald’s believes that there is a huge opportunity to grow all its brands globally by expanding presence in existing markets and entering new ones. The company’s expansion efforts continue to drive performance. Despite the pandemic, it opened about 500 restaurants across the market in 2020. The company is planning to open more than 1,300 restaurants globally in 2021. In China, it surpassed the 4,000 restaurants mark in June and is on track to open 500 new restaurants in the country this year.
The company is focusing on delivery program to drive sales. In the United States, 95% of its restaurants provide drive-thru facility. Over the past year, delivery sales mix has doubled in Australia, Canada and the United States. It announced that across its major six markets, digital sales crossed $10 billion or nearly 20% of system-wide sales in 2020. During first-half 2021, the company recorded approximately $8 billion in digital sales in its top six markets, reflecting a gain of 70% compared with last year.
Recently, McDonald's launched its first-ever loyalty program in the United States. It is worth mentioning that the company started testing its loyalty program in November last year. The company announced that MyMcDonald’s Rewards is available via the McDonald’s app nationwide.
Image Source: Zacks Investment Research
Concerns
McDonald's is currently grappling with supply disruption in the U.K. Consequently, it has removed milkshakes from its menu across all 1,250 of its British restaurants. The company informed that it is facing scarcity of bottled drinks as well. McDonald’s issued the following statement, “Bottled drinks and milkshakes are temporarily unavailable in restaurants across England, Scotland and Wales.”
Although overall comps have increased sharply, it is still well below the pre-pandemic level in few markets. In France and Germany, comp sales were still below 2019 levels in second-quarter 2021. However, the company has reopened indoor dining in both France and Germany in June though few restrictions are still in place. In China, comps sales were robust during second-quarter 2021 but still below the pre-pandemic level due to COVID resurgence in Southern China.
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 Papa John's International, Inc. (PZZA - Free Report) , Jack in the Box Inc. (JACK - Free Report) and The Wendy's Company (WEN - Free Report) , each carrying a Zacks Rank #2 (Buy).
Papa John's 2021 earnings are expected to increase 122.9%.
Jack in the Box has a three-five year earnings per share growth rate of 17%.
Wendy's has a trailing four-quarter earnings surprise of 24.8%, on average.