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McDonald's (MCD) Outperforms Peers in a Year: Here's Why
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McDonald's Corporation (MCD - Free Report) has performed better than its peers in an intensely competitive restaurant industry and high inflation environment. In the past year, the company’s shares have gained 4.5% against the industry’s decline of 12.5%. The company’s digital efforts, robust comps growth, expansion initiatives and its divided paying capabilities are aiding its performance.
McDonald's has an estimated long-term earnings growth rate of 8.4%. This Zacks Rank #3 (Hold) company pays out a quarterly dividend of $1.38 ($5.52 annualized) per share, giving a 2.2% yield at the current stock price. MCD’s payout ratio is 56, with a five-year dividend growth rate of 8%. Let’s discuss the factors highlighting why investors should retain the stock despite the high inflation environment.
Growth Drivers
McDonald's has been focusing on digitalization to drive growth. Before the coronavirus crisis, drive-thru accounted for about two-thirds of all sales in the United States. Despite reopening dining rooms, the company stated that drive-thru sales in its top six markets remain strong compared with the pre-pandemic levels. The company noted that in its top six markets, digital sales (including the mobile app, kiosks and delivery) were more than 30% of system-wide sales in second-quarter 2022.
McDonald's continues to impress investors with robust comparable sales growth in second-quarter 2022. Global comps advanced 9.7%, while a gain of 40.5% was reported in the prior-year quarter. This marks the sixth consecutive quarter of comps growth.
In the first quarter, comps in the United States, internationally operated markets and the international developmental licensed segment rose 3.7%, 13% and 16%, respectively. Japan and Latin America also recorded robust comps growth. The company reported comps growth for the 27th straight quarter in Japan.
Image Source: Zacks Investment Research
McDonald’s believes that there is a huge opportunity to grow all its brands globally by expanding its presence in existing markets and entering new ones. Its expansion efforts continue to drive performance. Despite the pandemic, the company continues to expand its global footprint.
The company is planning to open more than 1,800 restaurants globally in 2022, which includes 500 openings in the United States and IOM segment and 1,300 (including nearly 800 in China) inaugurations in the IDL market. The company expects restaurant growth of nearly 3.5% for 2022.
McDonald's continues to focus on the loyalty program to drive sales and average checks. It believes the program will help retain existing customers and expand the customer base. During the second quarter of 2022, the company reported accelerated digital engagement across the markets.
The company reported more frequent visits and incremental sales on the back of tailored loyalty messages, a strong lineup of mobile app offers and content offerings. Given a rise in digital adoption, the company remains optimistic and anticipates the initiatives to drive sales and average checks in the upcoming periods. McDonald's currently has loyalty programs in over 50 markets, including France, the United States, Germany, Australia and Canada.
Tecnoglass currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 24.4%, on average. Shares of the company have increased 3.6% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TGLS’s 2022 sales and earnings per share (EPS) suggests growth of 28.2% and 47.7%, respectively, from the year-ago period’s levels.
Cracker Barrel currently carries a Zacks Rank #2 (Buy). It has a long-term earnings growth of 6.9%. Shares of the company have declined 21.3% in the past year.
The Zacks Consensus Estimate for CBRL’s 2022 sales and EPS suggests growth of 16.3% and 15.4%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2. It has a long-term earnings growth of 34.4%. Shares of the company have risen 36.8% in the past year.
The Zacks Consensus Estimate for ARCO’s 2022 sales and EPS suggests growth of 27.1% and 104.2%, respectively, from the year-ago period’s levels.
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McDonald's (MCD) Outperforms Peers in a Year: Here's Why
McDonald's Corporation (MCD - Free Report) has performed better than its peers in an intensely competitive restaurant industry and high inflation environment. In the past year, the company’s shares have gained 4.5% against the industry’s decline of 12.5%. The company’s digital efforts, robust comps growth, expansion initiatives and its divided paying capabilities are aiding its performance.
McDonald's has an estimated long-term earnings growth rate of 8.4%. This Zacks Rank #3 (Hold) company pays out a quarterly dividend of $1.38 ($5.52 annualized) per share, giving a 2.2% yield at the current stock price. MCD’s payout ratio is 56, with a five-year dividend growth rate of 8%. Let’s discuss the factors highlighting why investors should retain the stock despite the high inflation environment.
Growth Drivers
McDonald's has been focusing on digitalization to drive growth. Before the coronavirus crisis, drive-thru accounted for about two-thirds of all sales in the United States. Despite reopening dining rooms, the company stated that drive-thru sales in its top six markets remain strong compared with the pre-pandemic levels. The company noted that in its top six markets, digital sales (including the mobile app, kiosks and delivery) were more than 30% of system-wide sales in second-quarter 2022.
McDonald's continues to impress investors with robust comparable sales growth in second-quarter 2022. Global comps advanced 9.7%, while a gain of 40.5% was reported in the prior-year quarter. This marks the sixth consecutive quarter of comps growth.
In the first quarter, comps in the United States, internationally operated markets and the international developmental licensed segment rose 3.7%, 13% and 16%, respectively. Japan and Latin America also recorded robust comps growth. The company reported comps growth for the 27th straight quarter in Japan.
Image Source: Zacks Investment Research
McDonald’s believes that there is a huge opportunity to grow all its brands globally by expanding its presence in existing markets and entering new ones. Its expansion efforts continue to drive performance. Despite the pandemic, the company continues to expand its global footprint.
The company is planning to open more than 1,800 restaurants globally in 2022, which includes 500 openings in the United States and IOM segment and 1,300 (including nearly 800 in China) inaugurations in the IDL market. The company expects restaurant growth of nearly 3.5% for 2022.
McDonald's continues to focus on the loyalty program to drive sales and average checks. It believes the program will help retain existing customers and expand the customer base. During the second quarter of 2022, the company reported accelerated digital engagement across the markets.
The company reported more frequent visits and incremental sales on the back of tailored loyalty messages, a strong lineup of mobile app offers and content offerings. Given a rise in digital adoption, the company remains optimistic and anticipates the initiatives to drive sales and average checks in the upcoming periods. McDonald's currently has loyalty programs in over 50 markets, including France, the United States, Germany, Australia and Canada.
Key Picks
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Tecnoglass Inc. (TGLS - Free Report) , Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) and Arcos Dorados Holdings Inc. (ARCO - Free Report) .
Tecnoglass currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 24.4%, on average. Shares of the company have increased 3.6% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TGLS’s 2022 sales and earnings per share (EPS) suggests growth of 28.2% and 47.7%, respectively, from the year-ago period’s levels.
Cracker Barrel currently carries a Zacks Rank #2 (Buy). It has a long-term earnings growth of 6.9%. Shares of the company have declined 21.3% in the past year.
The Zacks Consensus Estimate for CBRL’s 2022 sales and EPS suggests growth of 16.3% and 15.4%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2. It has a long-term earnings growth of 34.4%. Shares of the company have risen 36.8% in the past year.
The Zacks Consensus Estimate for ARCO’s 2022 sales and EPS suggests growth of 27.1% and 104.2%, respectively, from the year-ago period’s levels.