All hail the Egg McMuffin.
What: McDonald's (NYSE:MCD) posted comparable sales growth in the United States for the first time in two years during the third quarter. The company saw a rise of 0.9% in its home market and also gained throughout the rest of the world. The chain's international lead markets segment increased 4.6% for the third quarter, led by strong performance in Australia, the U.K., Canada, and Germany. In the high growth markets segment, comparable sales increased 8.9%, reflecting strong results in China and most other markets.
The company credited part of the U.S. sales turnaround to breakfast, specifically "a return to the classic recipe ingredients for McDonald's iconic Egg McMuffin", according to the earnings release. McDonald's noted that the successful introduction of the Premium Buttermilk Crispy Chicken Deluxe sandwich was a sales driver as well.
The positive earnings report suggests that the company's turnaround efforts are taking hold. Investors agreed as they sent the stock soaring 13.9% for the month, according to S&P Capital IQ data.
So what: One positive quarter does not mean that McDonald's has entirely solved its problems, but CEO Steve Easterbrook believes the company has turned a corner.
"I am encouraged by our operating performance for the quarter, with positive comparable sales across all segments, including the U.S., as well as sales recovery in China following the prior year supplier issue," he said. "I am confident in the fundamental strength of the McDonald's System and our ability to drive initiatives that are focused on delivering the greatest benefit for our customers."
Now what: Whether one quarter can become two and then perhaps a longer term trend in the U.S. may come down once again to the mighty McMuffin. The third quarter closed Sept. 30, six days before the company launched its all-day breakfast initiative on Oct. 6.
Selling a portion of its morning menu all day long is something customers have long asked for and whether it leads to increased sales or merely cannibalizes existing business will tell investors a lot about the chain's near term prospects. Logically, the ability to get some Hotcakes or an Egg McMuffin in non-morning dayparts should increase sales and help the company continue its comeback.
Daniel Kline has no position in any stocks mentioned. He enjoys the Sausage McMuffin as Canadian bacon is really just ham. The Motley Fool has no position in any of the stocks mentioned. 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.