McDonald’s reported fourth quarter earnings that topped forecasts Monday; however, it didn’t save the world’s biggest burger chain from becoming the afternoon trading’s biggest loser as US stocks dipped in an uncertain unveiling of the new Trump era.
The latest quarter saw an adjustment in its earnings per share from $1.31 per share in the previous year to $1.44 per share for the fourth quarter of 2016, exceeding analysts’ projections of $1.41. Market watchers also forecasted that revenues are likely to reach $5.99 billion but McDonald’s reported $6.03 billion worth of revenue. Although the said earnings may have topped analyst forecast, it still suffered a 5 percent decline in its consolidated revenues.
The company’s global comparable sales increased 2.7 percent, including positive comparable sales in the International Lead, High Growth and Foundational segments. It’s consolidated operating income also increased by 5 percent.
For its full-year highlights, McDonald’s returned $2.2 billion to shareholders via share repurchases and dividends in the fourth quarter and $14.2 billion for the full year, signifying a victorious attainment of the company's return target of $30 billion for the three-year period ending 2016. Moreover, the company announced a 6% increase in its dividend beginning in the fourth quarter.
Unanticipated earnings beats usually induce price bumps that immediately fade out, and this is highly likely what will happen to McDonald’s in the next trading sessions.
The above chart reveals very little in terms of trend. However, McDonald’s stock is trying to break out of the 20-day moving average line but may likely remain on the downside. January 20 trade touched the lower band at 119.87 preempting the next trading session’s losses.
Afternoon trade opened at 121.63 and closed 25 points lower at 121.38, having an intraday high of 121.69 and a trading day low of 121.12.
Currently, McDonald’s market capitalization is at $101.53 billion, reaching an average trading volume of 4.03 million. Its price-to-earnings ratio currently stands at 22.39 with revenue per employee of $59,367.
The Oak Brook, Illinois-based company has a reported EPS of 5.42 with a 0.94 dividend. It reached a 52-week low of $110.33 and a 52-week high of $131.96.
As a way to counter declining customer interest, McDonald’s launched in October 2015 its all-day breakfast, meaning the burger chain made its McMuffin sandwiches, biscuits, hotcake platters, sausage burritos and sides available for its patrons any time of the day instead of the usual morning timeslot.
The said strategy had indeed propped up sales during the same period of the previous year but weighing it against the latest quarter’s results would be difficult, as a statement released by McDonalds Monday.
But analysts think that the all-day breakfast gimmick wouldn’t be enough to sustain the burger chain giant’s diminishing following and other issues it currently faces.
Although recent quarter showed a positive field for McDonald’s, it remains to be seen if the burger chain magnate can sustain this or it would have to suffer continuous declines for the coming sessions.
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