McDonald's to Report 1Q Profit on Growing Global Sales
McDonald's Corp. expects to show a quarterly profit on Tuesday buoyed by growing global as sales as investors watch closely to see how the U.S. economic downturn has affected the biggest food retailer by revenue.
The Oak Brook, Illinois-based company has already reported growing global same-store sales for January and February, with growth in each of its main regions. The sales figure compares sales at stores open at least 13 months.
Net income for the first quarter is expected to be 70 cents per share, up from 62 cents a year earlier, according to a poll of analysts from Thomson financial. Revenue is expected to rise to $5.4 billion.
Global fast food companies are expected to benefit from the weak U.S. dollar, according to S&P Equity Research.
We expect dollar weakness, particularly vs. the euro and yuan to provide a boost to (earnings per share), analyst Mark Bashan said in a report. He expects earnings per share of 68 cents.
McDonald's sales spurt at the start of 2008 came after a slow December where same-store sales were flat. The company attributed the lack of growth to poor weather and weaker consumer spending due to an economic downturn.
Global same-store store sales grew 5.7 percent in January and 11.7 percent in February.
Lehman Brothers analyst Jeffrey Bernstein wrote in a note to investors that he expects strong sales in Europe and emerging markets. However he said that McDonald's focus on low-priced meals could pressure margins.
Performance has been fueled in the U.S. primarily by its breakfast, coffee, and value menu offerings. The U.S. has been the food chain's slowest growing division. January and February same-store stores sales rose 1.9 percent and 8.3 percent respectively.
Europe sales have been strong due to its premium beef and chicken selections, the company said in reports earlier this year. Same-store sales were up 8.2 percent in January and 15.4 percent in February
The Asia/Pacific, Middle East and Africa sales have grown due to locally relevant and affordable choices, along with extended opening hours in many markets, the company said. Same-store store sales in the region rose 7.8 percent and 10.9 percent.
Analysts have an average stock target price of $62.64. Shares closed at $58.67 at the end of trading today.
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