McDonald's Profits Climb -- For 10th Straight Quarter

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McDonald's 3Q Profit Climbs 15 Percent [AP]

Summary: McDonald's Corp. posted a 15% Q3 profit increase yesterday, extending their 3 1/2-year string of progressively stronger results. Premium coffee sales, more 24-hour restaurants, and strong European growth were among the key areas. CEO Jim Skinner said the company will continue to expand at a modest pace with new U.S. drive-thrus and new Happy Meal entrees and beverages that meet nutritional guidelines. He also committed 20% of its children's marketing budget to promote youth physical-activity. Net income was $0.63/share ($843M), up from $0.58/share a year ago. Same-store sales improved in every international and domestic region. Its shares have gained 30% in the last year, closing at $40.77, down $0.70. Citigroup analyst Glen Petraglia said promoting health and nutrition is a strong-suit for McDonald's, calling its menu the healthiest of the hamburger-restaurant operators. "As consumers become increasingly focused on health and wellness in the coming years, McDonald's menu has the concept well-positioned to sustain and potentially increase its market-share dominance over other hamburger chains."
Related links: Earnings call transcript • McDonald's comments on its China drive-thru strategy • McDonald's Discusses Chinese Car Ownership and Drive-Thrus • McDonald's China Shows the Sexy Side of Beef • McDonald's Corp. To Beat Estimates; But Why? • Fast Food Stocks in a Slowing Economy • Restaurant Stocks: Gross & Operating Margins • Bill Ackman Raising Funds to Take $2B Bite Out of MacDonald's
Potentially impacted stocks and ETFs: McDonald's Corp. (MCD) • Competitors: Burger King Corp. (BKC), Jack in the Box Inc. (JBX), CKE Restaurants Inc. (CKR), Wendy's International Inc. (WEN), Good Times Restaurants Inc. (GTIM), Back Yard Burgers Inc. (BYBI) • ETFs: PowerShares Dynamic Food & Beverage (PBJ), PowerShares Dyn Leisure & Entertainment ETF (PEJ), Consumer Discretionary SPDR ETF (XLY)

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