Doesn’t matter what your choice is – McDonald’s breakfast menu or lactose-free porridge with granola and peanut butter. Anyway, you can’t ignore the fact that McDonald’s is a phenomenon in the fast-food universe as well as in the stock market. And despite the crisis and general situation in the world, the company has presented financial reports with more impressive numbers than analysts had expected. So, what’s next? Let’s try to investigate if McDonald’s still has room for growth.
Since the beginning of the year, McDonald’s stock has increased by almost 10%. As you can see in the chart below, the shares have outperformed the S&P 500 and Dow Jones indices .
You could argue that there is not a large gap after a third of a year. That’s why we prepared one more chart – it shows what has been going on with the same symbols in the last five years. The picture below looks like a comparison between a McFlurry and cheap supermarket ice cream. Also, you should know that there are various factors which might influence the stock price. Some of them are pretty unpredictable but lots of future market movements can be forecast using a variety of trading tools. One of them is economic calendar – it warns you about all upcoming major economic events.
McDonald’s has dropped its Q1 report suggesting that the company might continue its positive movement. Earnings per share and revenue results beat analyst expectations – $2.63 against $2.33 and $5.9 bln against $5.59 bln. Moreover, net income and sales have grown as well.
However, McDonald’s raised prices on the menu in the past year and crises around the world are influencing the amount of spare cash people have. But the last thing might be even positive in this case. The reason is – doesn’t matter if there’s a crisis or not – people love cheap eats, and McDonald’s is the place to go for that.
Also, the company reduced various costs recently – a large number of employees were dismissed, and some offices were closed. This is one more positive factor for McDonald’s balance between income and expenses. Such optimization gives an opportunity to spend more money on business development and enlargement of delivery capabilities.
And we shouldn’t forget about the Chinese market. After the county eased off the Covid restrictions, McDonald’s can count on increased profits in the region.
Though, you shouldn’t look at the perspectives of McDonald’s shares only through rose-colored glasses. Current market conditions present challenges for businesses. Layoffs and shutting down the offices show that the situation in the company is far from cloudless. Moreover, you should remember that if the stock market goes down, MCD will probably do the same.
But analysts continue to believe in McDonald’s shares. The consensus forecast is +9% in the next 12 months. It might not be too impressive, but the forecast says that the shares may be a good addition to the portfolio. But it’s just a prediction, and it can be changed in a week or even tomorrow. That’s why before buying (or selling) these stocks, you need to do your own analysis – only after that, can you make an informed decision.
