McDonald's finally reaches easier sales comps

I'm raising my target price on this stock pick.

By Jim J. Jubak Jun 10, 2013 5:29PM

I can’t quite say “like clockwork,” since I expected McDonald's (MCD) to start reporting better year-to-year same store sales growth in April, but May is pretty close.


Monday morning McDonald’s reported May same store sales were up 2.6% year over year. That comes after a drop of 0.6% in April.


For the last quarter of 2012 and the first quarter of 2013 McDonald’s has been facing very tough year-to-year sales comparisons that made growth seem very disappointing. In February, for example, same store sales fell by 1.5%, which seemed even worse in comparison to a 7.5% pickup in same store sales in February 2012.

March was the last month where the company faced really tough year-to-year comparisons, and April was supposed to mark a turn to easier times. But in any event, slower sales in China as a result of fears of avian flu and in Europe as a result of continued recession hit April sales growth.


A sign outside the fast-food chain McDonaldIn May, however, the company showed a pickup of 2.4% in same store sales in the United States thanks to McDonald’s everyday value menu and new product introductions such as the Premium McWrap. In Europe comparable sales climbed 2% as positive results from the United Kingdom and Russia outweighed disappointing growth in Germany and France.


Sales growth in China continued to lag as fears of avian flu kept customers out of any restaurant selling chicken, and same store sales in Japan were flat.


On finally reaching the transition to easier comparisons -- and on likely summer sales momentum from new products such as the Egg White Delight version of the iconic Egg McMuffin, I’m raising my December 2013 target price to $110 from a prior $106. McDonald’s is a member of my Jubak’s Picks portfolio.


Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did not own shares in McDonald’s as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio.



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Tags: MCD
3Comments
Jun 11, 2013 9:02AM
avatar

You people in the financial and investment world are trying to steal and old "word" from the Casino scene...."Comps", you cant have it, the word is ours !!

 

Anything we can get for "free" in a Gaming Venue...Meals,Rooms,Drinks,Free play or chips.

Jun 12, 2013 10:31AM
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MCD??? Oh you mean good old DEMISE as it should be named. Nothing like good old Mon and MCD in bed together.

 

It's one thing serving up some nutrition at a reasonable price. And a whole different story about serving up a batch of crap and feeding it to the takers of. Then declare that this is a great investment?

 

So who all is helping out investing into DEMISE,and how does that feel being a helping hand or contributor of.

 

Don't think that is being very nice? Well those with that thought,have a seat for breakfast,lunch and dinner for the next 45 days or so and come back and tell us about your grand investment adventure!

 

Why from investing in DEMISE to the BIG Pharma for cures due to hey. Now that's funny! At least you can have a good old plastic made China toy to play with while in the waiting room!

 

avatar

Mr. Jubak!  I have believed previously that the reason McDonalds lost favor was because their employs had stopped being polite or

courteous to their customers.   Could you tell me how I have seemingly went wrong about McDonalds?

 

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