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McDonald's (MCD) to Sell Russian Business to Alexander Govor

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McDonald's Corporation (MCD - Free Report) is planning to exit the Russian business. The company reached a sale and purchase agreement with its current licensee Alexander Govor.  However, the financial terms of the deal have been kept under wraps.

Per the agreement, Alexander Govor, who operates 25 of the chain’s restaurant in Serbia, will acquire McDonald's whole restaurant portfolio and operate the restaurants under a new brand. McDonald's has 850 restaurants in Russia.

The buyer will pay salaries to all employees in 45 regions of Russia until the completion of the sale and will also fund existing liabilities to suppliers, landlords and utilities. In March, McDonald's announced the temporary closure of 850 stores in Russia in response to the country's invasion of Ukraine.

Russia and Ukraine make up nearly 2% of McDonald’s systemwide sales, which represents approximately 9% of its global revenues. Most of the stores in Russia are directly owned and operated by McDonald’s.

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Stock Performance

Shares of this Zacks Rank #3 (Hold) company have dropped 1% in the past year compared with the industry’s decline of 22.1%.

The company continues to impress investors with robust comps growth. Strong drive-thru presence and its investments in delivery and digitization in the past few years have aided McDonald’s in countering the pandemic. Robust digitalization will help the company drive long-term growth and capture market share. The company is focusing on store expansion efforts. It is planning to open more than 1,800 restaurants globally in 2022.

Key Picks

Some better-ranked stocks in the same space are BBQ Holdings, Inc. (BBQ - Free Report) , Jack in the Box Inc. (JACK - Free Report) and Arcos Dorados Holdings Inc. (ARCO - Free Report) .

BBQ Holdings carries a Zacks Rank #2 (Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have declined 21.6% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and EPS suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.

Jack in the Box carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 11.8%, on average. Shares of the company have declined 36.5% in the past year.

The Zacks Consensus Estimate for JACK’s current-year sales growth of 5% from the year-ago period's levels.

Arcos Dorados flaunts a Zacks Rank #2. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have appreciated 25.7% in the past year.

The Zacks Consensus Estimate for Arcos Dorados' 2022 sales and EPS suggests growth of 16.6% and 66.7%, respectively, from the year-ago period's levels.

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