McDonald's Trading forecasts and signals

January 27 McDonald's (NYSE: MCD) reported quarterly profit and revenue, not meeting analysts' expectations due to pressure from increased costs.Excluding strategic profit and income tax benefits, McDonald's earned $2.37 per share with the consensus of analysts from FactSet at $2.11. Net sales increased by 57% to $5.89 billion, exceeding market expectations of $5.6 billion. Global comparable sales increased by 40.5% compared to last year and by 6.9% in two years.MCD's net income for the fourth quarter reached $1.64 billion, or $2.18 per share, compared with $1.38 billion, or $1.84 per paper, a year earlier. Excluding expenses related to the sale of McD Tech Labs to IBM and other cost items, McDonald's earned $2.23 per share, below the expectations of analysts surveyed by FactSet at $2.34.Operating expenses increased by 14% in the quarter due to higher salary costs for McDonald's employees and many of its franchisees. This is due to the need to attract and retain employees in difficult market conditions. In addition, the ingredients for the main menu products (Big Macs and McNuggets) are becoming more expensive.Net sales increased by 13% to $6.01 billion, falling short of consensus expectations of $6.03 billion. At the same time, revenue (net) was supported by an increase in prices for McDonald's meals, which was undertaken to reduce pressure from rising costs. Comparable sales increased by 12.3% compared to last year and by 10.8% in two years. In the McDonald's home market, this indicator added 7.5% YoY, exceeding FactSet estimates at 6.8%. In two years, comparable sales in the States increased by 13.4%.Outside the US, McDonald's results were just as strong, although in some markets net sales came under pressure due to an increase in the incidence of COVID-19. MCD's licensed international development division, which includes Japan and Latin America, reported a 14.2% increase in comparable sales, above FactSet estimates of 8.9%. However, China reported a decrease in this indicator, as the country faced a worsening of the epidemic situation in the last quarter.Digital sales for the full year 2021 exceeded $18 billion, which corresponds to about 16% of total global revenue.In the future, by the end of 2022, capex will amount to $2.2-2.4 billion, about half of which will be allocated for the opening of more than 1,400 new restaurants (the indicator reflects the difference between opened and closed outlets), which, according to expectations, will provide 1.5% of the company's total sales in 2022. Approximately 40% of capital expenditures will be directed to the development of business in the United States, mainly on the modernization of restaurants.Despite the pressure on profits caused by higher costs for the purchase of products and employee compensation, we continue to positively assess the prospects for the growth of McDonald's business. Last year, the restaurant chain conducted successful advertising campaigns in collaboration with world stars (Travis Scott, Mariah Carey and the Korean pop group BTS), releasing limited branded sets and merch. These proposals have significantly boosted McDonald's sales, and we believe that the company will continue to cooperate with media personalities this year. In addition, McDonald's occupies a unique position in the field of fast food enterprises. This allows the issuer to effectively implement digitalization of sales, which will help simplify work in conditions of shortage of personnel in the industry.Our target price for MCD paper is ...

McDonald's (NYSE: MCD) yesterday reported net income of $2.22 billion, or $2.95 per share, for the second fiscal quarter, compared to $483.8 million, or $0.65 per share, a year earlier. Excluding strategic earnings and tax benefits, McDonald's earned $2.37 per share, exceeding the consensus of analysts polled by FactSet at $2.11 per share. Net revenue increased by 57% to $5.89 billion, exceeding expectations of $5.6 billion. Global comparable sales increased by 40.5% compared to 2020 and by 6.9% in two years.Comparable sales in the United States increased by 25.9% in the quarter and by 14.9% in two years. According to the management, this result is due to the high volume of sales of the new chicken sandwich, which was launched in February, as well as the success of the "Star Orders" advertising campaign, which is held with the participation of the k-pop group BTS. The sales growth allows the company to ease the pressure on the financial indicators of such factors as an industry-wide shortage of labor and increased raw material costs. In particular, the launch of a limited edition of "BTS Star Orders", which include McNuggets and special sauces, caused a frenzied stir among the group's huge fan audience and even forced McDonald's to close some outlets in Indonesia.There is also a significant increase in turnover outside the United States. The segment of international markets, including the UK and France, showed an increase in comparable sales by 75.1% compared to 2020 and by 2.6% over two years. The company attributes such strong growth in the region to the easing of restrictions and the gradual opening of catering outlets. In the segment of international license markets, comparable sales roughly correspond to the indicators of the last two years.The volume of digital sales in the six main markets for McDonald's amounted to about $8 billion in the first half of the year. Since the issuer is striving to develop this direction, which was opened during the acute phase of the pandemic, an American loyalty program was launched in early July, which has already been joined by more than 12 million consumers.We positively assess the financial results of McDonald's and believe that the company will soon be able to fully restore the occupancy of restaurants. In addition, during the pandemic, the issuer managed to form a strong digital sales channel, which continues to develop and will be able to increase the stability of the company's operational indicators.Our target price for McDonald's Corporation shares is $274 per ...