Investors get a break today: McDonald’s soars on earnings beat

By Emiliana Molina

Shares of McDonald’s Corp. jumped 8 percent Thursday after the fast food giant topped profit and revenue expectations in the third quarter and said comparable restaurant sales rose for the first time in two years.

McDonald’s reported a 4 percent global rise in comparable sales, or sales at restaurants open for more than a year, including a surprise 0.9 percent increase in the U.S, where sales have been dragging.

Shares of the company vaulted to a record $110.75 at midday, a gain of $8.21 from Wednesday’s close.

“The return to positive same-store sales across all of the operating segments is a huge progress for their turnaround plan,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence.

McDonald's same store sales exceed expectations.

On the sunny side up, McDonald’s exceeds expectations. (Emiliana Molina/Medill)

McDonald’s President and CEO Steve Easterbrook took the top job in March to try to stop the fast food giant’s sales slide with a turnaround strategy that includes all-day breakfast, which started Oct. 6, and a “2 for $2.50” promotion.

“While still in the early stages, we believe our turnaround plan is starting to generate the change needed to reposition McDonald’s as a modern, progressive burger company,” Easterbrook said, adding that comparable sales are expected to be positive in the fourth quarter.

Net income for the quarter ended Sept. 30 rose 23 percent to $1.31 billion, or $1.40 per diluted share, from $1.07 billion, or $1.09 per diluted share in the year-ago period. The results far outstripped the analysts’ consensus estimate of $1.27 per share and came despite significant head winds from a strong U.S. dollar.

Revenue for the third quarter fell 5.3 percent to $6.62 billion, compared with $6.99 billion in the year ago period, due mainly to the impact of the strong dollar on currency translation. Excluding the currency impact, revenue would have risen 7 percent, the company said.

McDonald’s attributed the growth in sales to the introduction of the new Premium Buttermilk Crispy Chicken Deluxe sandwich and breakfast, including a return its classic recipe for the Egg McMuffin.

In its high growth markets segment, third quarter comparable sales rose 8.9 percent, reflecting a recovery in China after last year’s meat supplier scandal.

Photo at top: McDonald’s exceeds McSales. (Emiliana Molina/Medill)