McDonald’s Corp (NYSE:MCD) released its quarterly earnings yesterday, which impressed investors with both earnings and sales coming in higher than expected. Sales of $5.37 billion were down 7% from a year ago and net income was also down by 13%, but both numbers were still better than what analysts were expecting. Arguably the most important figure, same-store sales in the U.S., showed a growth of 2.4%, which was also in line with estimates.
The small growth rate underlines the challenges that McDonald’s is facing in the industry, as the line between the famous restaurant brand and its competitors continues to get more and more narrow. A big reason for the improved store sales was actually because McDonald’s increased its prices, as it saw fewer purchases overall.
However, in an effort to improve its top line, McDonald’s is going to ramp up its breakfast options with more choices for customers, as relying on price increases alone is not going to lead to any sustainable, long-term growth for the company.
Whether or not McDonald’s is still a good buy is a big question mark. In the past 12 months, the stock’s performance has been flat, although over three years it has risen by 50%. For dividend investors, it’s a good option to hold as you can earn a modest yield of over 2% per year, and McDonald’s has increased payouts over the years as well.
While it’s best growth days may be behind the stock, if you’re looking for a solid, long-term hold to add to your portfolio, McDonald’s could be a great choice.
