McDonald’s Corp. (NYSE:MCD) stock was down 0.83% in early afternoon trading on October 26. Shares have climbed 5.3% over the past month. The company released its third-quarter results on October 23.
McDonald’s reported its 13th consecutive quarter of comparable sales growth for its global brand. Global comparable sales rose 4.2% year-over-year while consolidated revenues fell 7% due to the impact of a re-franchising initiative.
System-wide sales climbed 5% in constant currencies while the company posted diluted earnings per share of $2.10 which represented a 9% drop from the prior year.
The company’s international segment once again led the way as it posted 5.4% growth in sales compared to a 2.4% increase in U.S. sales. The decision to make all-day breakfast available in February 2017, a move that was dismissed as a gimmick by some analysts at the time, has produced rock-solid earnings and has been the catalyst for the soaring stock. Shares are up over 35% since mid February.
McDonald’s has undertaken an aggressive share repurchase program and announced a 15% increase to its quarterly dividend. It now offers a dividend of $1.16 per share representing a 2.3% yield.
The U.S. Tax Cuts and Jobs Act has played a role in McDonald’s aggressive expansion efforts in 2018 and freed up cash to beef up its technology.
McDonald’s management deserves praise after the stock looked to be in a dire position in late 2016. However, investors who have held since then should consider taking profits in fiscal 2018.
Economic headwinds are fast emerging in the U.S. and the short-term boost from tax reform will dissipate in the coming quarters.
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