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Early Reaction To McDonald's 'Pretty Strong Numbers'

Fast-food giant McDonald's Corp (NYSE: MCD) reported "pretty strong numbers" in its fourth-quarter results, Morningstar analyst R.J. Hottovy said on CNBC.

Benzinga · 01/29/2020 14:00

Fast-food giant McDonald's Corp (NYSE: MCD) reported "pretty strong numbers" in its fourth-quarter results, Morningstar analyst R.J. Hottovy said on CNBC.

McDonald's reported an EPS beat and in-line revenue but strong U.S. and global comps suggest competitive concerns present in the prior earnings report have since subsided, the analyst said. The restaurant chain is also showing benefits from management's investments in technology.

McDonald's reported quarterly earnings of $1.97 per share, which beat the analyst consensus estimate of $1.96. The company reported quarterly sales of $5.349 billion, which beat the analyst consensus estimate of $5.3 billion. This is a 3.6% increase over sales of $5.163 billion the same period last year.

Why It's Important

Under the leadership of McDonald's new CEO Chris Kempczinski, the company isn't likely to show any notable shift in strategy during the conference call, he said. Kempczinski played a senior role in many of the recent initiatives although the CEO will be counted on to offer a "new spin" on the vision.

Kempczinski could also discuss during the conference call updates on new menu items, including a premium chicken sandwich or plant-based items.

Hottovy said McDonald's needs to address the coronavirus as China is home to around 9% of total units and around 10% of total sales. Any commentary would be important not only for McDonald's investors but for the broader restaurant sector.

Any financial impact from the virus won't be company specific and could present an opportunity if investors get "spooked," he said.

McDonald's stock trades around $210.50 per share.

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