- Summary: McDonald's guidance for Q2 results: Overall sales up 6.6% in Q2 and 8.1% in June. Same-store sales up 5.5% in Q2, due to breakfasts and kids' meals in the US and strength in Europe, Japan and Australia. Same-store sales in the US up 4.2%, in Asia-Pac up 8.8%, driven by Japan and Australia. EPS of $0.67 includes $0.10 from sales of stake in Chipotle Mexican Grill in the IPO and two cents of one-time chartes; without those, EPS would have been $0.59, higher than analysts' consensus of $0.56.
- Comment on related stocks/ETFs: McDonald's results contrast with Target's disappointing guidance for July same store sales issued last night. McDonald's is clearly benefiting from expansion into higher growth overseas markets and improvements in its US menu. But why isn't it being hit by the same factors (higher gas prices, rising interest rates, widening income inequality) impacting Wal-Mart? One intriguing possiblity: McDonald's meals are so cheap that its sale might actually rise as its customers' incomes get squeezed. (In economic terms: McDonald's meals are an "inferior" good.
Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):