WEN - McDonald's hits all-time high as consumers lap up higher prices

2023-04-25 09:50:23 ET

McDonald's Corporation ( NYSE: MCD ) opened trading with a slight gain as investors weighed a strong sales report against a share price that sits right at the all-time high.

During the earnings conference call, McDonald's ( MCD ) execs guided for net restaurant growth of about 1,500 additions in 2023. The restaurant chain also expects an operating margin of about 45% for the year. Notably, McDonald's ( MCD ) noted that it saw traffic increase in every segment during Q1, including an improved performance in China.

Cowen analyst Andrew Charles pointed to the same-store sales beats across the three segments that drove an EPS beat. "We view IOM's robust sales performance across key European markets as calming the bear case, while IOM company margins beat our estimate though missed consensus," he noted. MCD's reiterated 2023 outlook is said to reflect greater conservatism following strong Q1 results. The report was strong enough for Cowen to keep an Outperform rating on MCD as it highlighted the defensive appeal.

Bank of America analyst Sara Senatore said MCD’s 12.6% global same-store sales mark pointed to continued momentum after Q4's identical 12.6% comparable. She noted the acceleration in both the one-year and stacked comparisons was impressive. The company's operated margin weakness was said to highlight the continued cost headwinds facing operators as profitability both missed consensus, but the weakness also goes to the appeal of a franchised model in the current environment that insulates MCD’s results from higher input costs even as it benefits from historically high levels of pricing.

Shares of MCD rose 0.11% to $293.46 and carved out a new all-time high of $295.16 early in the session. Within the burger sector, Shake Shack ( SHAK ) fell 1.48% and Wendy's ( WEN ) was off 0.50% .

More on McDonald's:

• Read the latest breakdowns on McDonald's from Seeking Alpha analysts
• View the growth metrics
• See the financial and valuation comparisons to sector peers
• Dig into the Seeking Alpha Quant Rating
• See the highlights from the Q1 earnings report

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