Dow Gains Again Despite McDonald's Poor Report; Yum! Brands Jumps After Hours

The Dow moved higher for the fifth time in six sessions on strong earnings. McDonald's disappointed in its report, while Yum! moved higher after hours on its quarter.

Apr 22, 2014 at 10:00PM
Longview

Earnings season propelled stocks higher again today as the broad market notched its sixth-straight gain, with M&A activity in the health-care sector and a strong earnings report by Netflix providing a lift. By the end of the session, the Dow Jones Industrial Average (DJINDICES:^DJI) finished 65 points higher, or 0.4%, and the S&P 500 gained by a similar percentage. The tech-heavy Nasdaq jumped 1% on the strength of Netflix's report and Facebook's analyst upgrade. Analysts are only projecting minimal earnings growth this season, at 1.1% due to the poor winter weather, but those low expectations seem to be giving reporting companies a low bar to jump over.

Only one economic report was released today as the National Association of Realtors said existing home sales in March totaled annualized rate of 4.59 million, essentially in line with estimates and February's total at 4.6 million. Home sales are still down from last year, but could pick up with warmer weather.

Four Dow components reported earnings today, including McDonald's (NYSE:MCD), which fell 0.4% after a lackluster quarter. The Golden Arches' domestic problems continued as same-store sales fell 1.7% in the U.S, though they were up globally by 0.5%. Total revenue improved 1%, or 3% when adjusting for currency fluctuations, to $6.7 billion, short of estimates at $6.73 billion, while EPS of $1.21 missed expectations of $1.24 per-share profit, though the figure would have been $1.24 after adjusting for currency changes. While the results weren't terrible, the quarter painted a portrait of a company struggling to maintain its fast-food leadership.

McDonald's is undergoing changes to modernize stores, adding more prep tables to allow for greater order customization and speedier service, while fighting off new entrants in breakfast and other key categories. Though the U.S. generates only about a third of the company's revenue, declining comps at home could foreshadow changes coming to international markets as competitors expand and rival tastes evolve.

Kfc

Source: Wikipedia

Rival Yum! Brands (NYSE:YUM) reported earnings after hours today with shares jumping 3.6% to a new 52-week high. The KFC parent saw sales in China rebound after a scare about the safety of its chicken and the avian flu epidemic caused receipts to plummet last year as same-stores sales fell 20%. In its first quarter, sales in China improved 9% on a comparable basis, and 17% overall.  Earnings of $0.87 per share topped estimates at $0.85, while revenue grew 7%, $2.72 billion, falling short of the consensus at $2.8 billion. Yum has no plans to slow down its growth in China as it plans to add at least 700 new restaurants in there this year. Management also projected at least 20% EPS growth this year, driven by its aggressive international expansion, as U.S. comps were down. Virtually all of its profit gains came from China in the past quarter, and the world's No. 2 economy will continue to guide Yum's fortunes going forward.

Something else big is happening in China
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And everyone from BMW, to Nike, to the U.S. Air Force is already using it every day. Watch The Motley Fool's shocking video presentation today to discover the garage gadget that's putting an end to the Made In China era... and learn the investing strategy we've used to double our money on these three stocks. Click here to watch now!

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Facebook, McDonald's, and Netflix. The Motley Fool owns shares of Facebook, McDonald's, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers