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McDonald's Continues to Sizzle

By Alyce Lomax – Updated Apr 6, 2017 at 12:28PM

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The fast-food giant perserveres to profit well in the latest quarter.

McDonald's (NYSE: MCD) delivered another juicy quarter for investors to chew on. It's beginning to seem like the fast-food giant can't be stopped.

First-quarter net income increased 11%, to $1.09 billion, or $1.00 per share. The earnings figure included a $0.05-per-share currency benefit. Revenue jumped 10%, to $5.61 billion, but adjusted for currency effects, revenue grew 4%.

Global same-store sales (aka comps) increased a healthy 4.2%. International growth offset some sluggishness at home; European comps increased 5.2% and Asia/Pacific, Middle East, and Africa increased 5.7%. U.S. comps increased only 1.5%.

Despite formidable competition from well-established quick-servers Yum! Brands (NYSE: YUM), Wendy's/Arby's (NYSE: WEN), and Burger King (NYSE: BKC), Mickey D's continues to show impressive growth. It's hard for Yum!'s KFC to argue that its new Double Down sandwich -- which uses chicken as buns -- isn't a sign of attention-seeking desperation in a difficult fast-food climate. And let's not even get started on the controversial topic of Burger King's healthiness, mentally or otherwise, since yet another recent ad campaign caused a bit of a row.

Meanwhile, McDonald's is giving Starbucks (Nasdaq: SBUX) a good run for the money, as McDonald's furthered its caffeinated McCafe business by offering lower-priced frappes.

Shareholders should have no beef with McDonald's. The stock has performed well -- up more than 31% over the last year -- and its actual business performance has also been admirable, unlike many retail and restaurant stocks that seem to have bubbled higher on investor hopes and little else. Cheesecake Factory's (Nasdaq: CAKE) trading at 23 times forward earnings is one example of a pricier restaurant stock with a business where growth might be curtailed by an uncertain economy.

With a forward P/E of 16, McDonald's still looks like a good deal for investors, too. What do you think? Use the comments boxes below to chime in.

Queue up some related Foolishness:

Starbucks is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended a bull call spread position on Yum! Brands. Try any of our Foolish newsletters free for 30 days.

Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy.

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Stocks Mentioned

McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$245.95 (-0.80%) $-1.99
Starbucks Corporation Stock Quote
Starbucks Corporation
SBUX
$84.17 (-0.63%) $0.53
The Wendy's Company Stock Quote
The Wendy's Company
WEN
$19.07 (-0.37%) $0.07
Yum! Brands, Inc. Stock Quote
Yum! Brands, Inc.
YUM
$110.65 (-0.13%) $0.14
The Cheesecake Factory Incorporated Stock Quote
The Cheesecake Factory Incorporated
CAKE
$28.43 (-2.44%) $0.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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