Marel

USA - McDonalds the safest investment out there

29 Jan 2013

McDonald’s Corporation (NYSE:MCD) is scheduled to announce its Q4 earnings on January 23, 2013.
 
 
 
The stock has had a bumpy 2012, going as high as $101 in the initial part of the year before retreating to $84 in November.
 
 
 
The company has struggled to post the desired same-store sales in the second half of 2012, but the figure turned red for the first time in nine years in October.
 
 
 
Things improved in November with same-store sales rising 2.4%. [1] McDonald’s will announce the December sales growth in its upcoming earnings.

 

Same-store sales growth is an important parameter to gauge a restaurant chain’s performance since it only includes restaurants open for more than a year. The sales of newly opened restaurants are unusually high or low and can distort the overall revenue/store figure.

 

Margins Under Pressure

 

In this quarter, gross margins will be under pressure since the company expects the commodity inflation to be in the region of 3.5% to 4.5% in the U.S. and around 2.5-3.5% in Europe. Food expenses account for roughly one-third of the sales.
 
 
 
McDonald’s expects commodity inflation to ease next year so margins could stabilize going forward if this is true. [2] The U.S. margins might also be impacted this quarter by higher labor expenses due to the 2011 HIRE Act payroll tax credit...

 

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Source: Argentine Beef Packers S.A.

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