Shares of McDonald's Corporation (NYSE:MCD) were climbing today after the fast-food giant delivered another strong earnings report. Shares of Mickey D's were up 5.3% as of 11:37 a.m. EDT as the company posted solid comparable sales and beat analyst estimates, continuing its track record of fast growth under CEO Steve Easterbrook.
McDonald's posted global comparable sales growth of 5.5% in the first quarter, ahead of estimates of 3.9%, on a 0.8% increase in traffic, marking the 11th consecutive quarter of positive comparable sales and fifth consecutive quarter with increasing guest counts, further evidence that efforts to modernize the brand and menu are paying off.
In the U.S., comparable sales were up 2.9%, and the company saw an especially strong performance in major international markets like the U.K., Germany, and Canada.
Overall revenue declined 9%, or 15% in constant currencies, to $5.14 billion due to refranchising initiatives; however, that easily beat estimates at $4.97 billion. On the bottom line, the company continued to gain leverage, and adjusted earnings per share increased 22%, or 16% in constant currencies, to $1.79, ahead of expectations at $1.67.
Alluding to recent initiatives like all-day breakfast, using fresh beef in Quarter Pounders, and eliminating antibiotics from its chicken, Easterbrook said, "More customers are recognizing that we are becoming a better McDonald's, appreciating our great tasting food, fast and friendly service and compelling value as we execute our Velocity Growth Plan."
At a time when many U.S. restaurant chains have slipped during the "restaurant recession," McDonald's has continued to thrive. Customers around the world appear to be responding to its recent initiatives like the ones above as well as an expanded value menu and variations on the Big Mac such as the Grand Mac and Mac Jr.
McDonald's did not issue guidance in its report, but I'd expect the company to continue delivering solid results as has become a pattern. Considering its recent growth, the stock looks very reasonably priced.