McDonald's surprised investors with stronger-than-expected same-store sales in August. Sales at restaurants in the Asia-Pacific/Mideast/Africa region areas jumped 12.4%, Europe was up 6.1%, while U.S. stores enjoyed a 7.4% gain. Goldman Sachs had projected U.S. same-store sales to be up only 4%. Globally, same-store sales were up 8.1%; Bear Stearns had estimated a 5% increase. McDonald's CEO Jim Skinner said, "Our worldwide sales momentum continues, thanks to our customer-focused emphasis on menu variety and value, convenient service, innovative marketing and contemporary restaurants." McDonald's can also thank its late-night hours, premium coffee, and new version of the well-liked Snack Wrap for the strong performance. After the numbers were released, UBS increased its full year earnings estimate by a penny to $2.81/share. Morningstar, however, did not adjust its Fair Value estimate of $54.00. "Clearly, the company's performance over the last four-plus years has been nothing short of amazing, which begs the question: How much longer can the fast food chain keep this up?" it said in a research note. The company's stock was up 4.5% to $52.41 in midday trading Tuesday.
Sources: Press Release, Wall Street Journal, CNN
Commentary: McDonald's Posts Q2 Loss on Store Sales, Adjusted EPS In-Line • Wake Up and Smell the Coffee: Starbucks Still Doesn't Get It
Stocks/ETFs to watch: MCD. Competitors: BKC, YUM. ETFs: PBJ, VCR
Earnings call transcript: McDonald's Q2 2007
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