McDonald's Miss Can't Shake the Dow's 100-Point Jump

Home Depot's upgrade helps the stock jump by 2.4%, while Netflix's subscription boom powers the stock's surge.

Dan Carroll
Dan Carroll
Apr 22, 2014 at 2:30PM

Earnings season is in full gear today, and the major U.S. indices are all rising. As of 2:30 p.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) had gained 100 points, with all but a handful of blue-chip member stocks in the green today. McDonald's (NYSE:MCD) stock was down about 0.5% after a downbeat earnings report, but Home Depot's (NYSE:HD) vaulted to the top of the index by afternoon. Let's catch up on what you need to know.

McDonald's misses the mark

McDonald's Restaurant in Beijing. Source: McDonald's Image Gallery

The Golden Arches' first-quarter earnings fell to $1.21 per share from a year ago'squarterly result of $1.26 per share, and also missed analyst expectations. Although McDonald's revenue climbed year over year, the fast-food chain faces continued trouble at home in the U.S. Domestic same-store sales fell 1.7% year over year, a result the company chalked up to the unseasonable winter weather and the mounting challenges of rivals looking to carve out a piece of McDonald's market dominance. While it's encouraging that the company has done well in foreign markets -- McDonald's posted a 1.4% gain in Europe, a market that has performed surprisingly well given the continent's ongoing economic slump -- it must appeal to American customers and cut off hard-charging competitors in order to impress investors through 2014.

Home Depot has held the Dow's gain in place despite McDonald's stock slump today, as the home improvement retailer's shares have jumped by 2.5%. Thank BMO Capital Markets for the upgrade to Home Depot's stock from market perform to outperform. BMO cited upbeat sales and costs. While the stock has risen just 4% over the last six months, Home Depot is looking to push its leadership of its niche to new heights in the near future. The company is expanding into e-commerce, a forward-thinking move that should help control costs and stave off rivals such as Lowe's (NYSE:LOW), which has made up ground on its chief competitor in recent quarters. Lowe's is set to report its own earnings in late May; investors in this space should keep on eye on whether the company can keep up with Home Depot and meet average analyst expectations of 7% year-over-year revenue growth for the quarter.

Meanwhile, Netflix (NASDAQ:NFLX) stock has climbed 6% today. Shares of the leading video streamer have nearly doubled over the past year, and the company's gain of 4 million new subscribers in its most recent quarter -- including 1.75 million international customers, a number that beat expectations -- should only help the stock going forward.

Netflix also matched revenue estimates while beating earnings projections for the last quarter, and the company's plans to hike new customer subscription prices in the near future should keep sales churning higher. The company experimented with raising prices in the past by hiking subscription fees by one euro in Ireland. Given that Netflix cited a "limited impact" from the raise, don't expect too many subscribers to be turned off from the move. If Netflix can continue generating original content to compete with the increasingly competitive online streaming market, this company and stock should be in for a great run.