Will Investors Be Saying "I'm Lovin' It" After McDonald's (MCD) Q3 Earnings Report?
McDonald's (NYSE: MCD) has always been one of America's most beloved companies. Who doesn't enjoy a hamburger, fry, and small Coke after a long hard day? And you can have it at a good price?
With the taste, location, and price, McDonald's was one of only a handful of companies that saw growth through the recession. Since their Q407 earnings report, McDonald's has always topped EPS estimates, though missed on revenues a few occasions.
According to Data from Bloomberg, 13 analysts have a Buy rating, 8 have a Hold, and, (guess what?), none have a Sell.
This time around, the Street is done playing games. Where the consensus was $0.97 for the second quarter, the VERY SAME analysts have set the bar to $1.11, an increase of $0.14! Revenue expectations are also at $6.1 billion, up from $5.72 billion. What could they possible see in the home of Ronald, Grimace, Birdie, the Fry Guys and all the other lovable characters that have warmed our hearts for generations?
At Wedbush Morgan, McDonald's certainly graces the lunch table. In August, the firm said this about McDonald's over Burger King: "McDonald's is the more compelling investment. BKC's shares have appreciated 16% in the last month [July/August] vs. 0% at MCD. For investors interested in global fast food exposure, our top pick would be MCD which currently trades at just 13.3x 2010E and is posting stronger SSS and profit per store increases, and has greater potential for positive EPS revisions owing to its significant FCF and stronger fundamentals." They have an Outperform rating on MCD, with a price target of $62.
Wedbush then REITERATED their stance in September. They confirmed their Outpeform rating, and kept the price target of $62. Wedbush commented: "MCD raises dividend for the 23rd consecutive year...Raise reaffirms our confidence in MCD's differentiated business model...Next catalyst is November Analyst Day...MCD is on the Wedbush Best Ideas List."
Goldman Sachs also has MCD at a Buy rating, with a price target of $68! GS Says, "We highlight MCD as our top QSR pick heading into 3Q EPS reports. We see upside to 3Q PS on positive global SSS of 2.5% and commodity driven margin expansion. Further, FY10 EPS will likely move higher on forex mark to market."
Last week, Jim Cramer also made some positive comments about McDonald's, saying that if their yield goes up (meaning the shares have decreased in value) then buy up the stock. Unfortunately, McDonald's has been up since that report.
McDonald's will issue its Q309 results via press release at approximately 8:00 AM (EDT) on October 22, 2009. Stay tuned to StreetInsider.com's
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