Food Chain Stock to Watch: Mcdonald’s Corp (NYSE: MCD)

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Mcdonald’s Corp (NYSE: MCD) stock fell over 0.2% in the after-hours session of 29th April, 2021 (Source: Google finance) after the company posted better than expected results for the first quarter of FY 21 driven by eased COVID-19 restrictions in some markets and U.S. customers, flush with stimulus cash, craving new chicken sandwiches and nuggets. The company has reported net income of $1.54 billion, for the first quarter of 2021, from $1.11 billion, a year earlier. The company posted global comparable sales growth of 7.5% for the first quarter, which surpassed pre-pandemic 2019 levels. That trounced the 4.71% growth expected by analysts polled by Refinitiv IBES.

McDonald’s biggest competitor

Meanwhile, the company had rolled out its crispy chicken sandwiches earlier this year in the United States, looking to tap into a frenzy kicked off by privately owned Chick-fil-A and Restaurant Brands International Inc’s Popeyes in 2019. It also brought back spicy chicken nuggets. Those factors, combined with celebrity marketing campaigns, helped power a 13.6% rise in sales at restaurants open for more than a year, trouncing expectations of 9.25%, according to the analysts. In the IOM segment, comp sales were up 60 basis points in Q1. Comp sales were positive for the U.K. and Canada for the first quarter and surpassed 2019 pre-pandemic levels. In France and Germany, comps were negative for the first quarter, as dining rooms were closed and curfews were in place. Comp sales in the IDL segment were up 6.4% for the first quarter, with growth across nearly all geographies. The performance was largely driven by positive results in China and Japan.

MCD in the first quarter of FY 21 has reported the adjusted earnings per share of $1.92, beating the analysts’ estimates for the adjusted earnings per share of $1.81. The company had reported the adjusted revenue growth of 9 percent to $5.12 billion in the first quarter of FY 21, beating the analysts’ estimates for revenue of $5.03 billion. The company delivered the adjusted operating margin of 41.9%, due to improved sales performance, higher other operating income and lower G&A costs compared to last year. Total restaurant margin dollars increased 10% in constant currencies, with improvement in both franchise and company-operated restaurant margins. Franchise margin dollars grew by over $170 million in constant currencies, mostly from the strong sales performance in the U.S.

The company has also raised its 2021 system wide sales outlook to the mid-teens from the low double-digits. For the second quarter, the company expects EPS to be about $0.10 and for fiscal 2021, the company expects the earnings per share to be in the range of $0.24 to $0.26.

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