August same-store sales increased 6%, which is particularly impressive when you consider that McDonald's has had tough comparisons for quite some time now. The company attributed the strong results to strength in Europe (comps there increased 8.8%) and its new snack wrap, as well as the continued popularity of breakfast items.
The European angle is an important one, considering the fact that last spring, McDonald's struggled with that geographic region. Furthermore, McDonald's was able to boast that its comps in nearly every country increased in August, with its segment that includes Asia/Pacific, the Middle East, and Africa doing well, mostly because of strength in Japan.
McDonald's shares flew upward yesterday and hit a six-year high. I can't say I blame investors for their optimism at this point in the game. Even with recent share appreciation, McDonald's EV/EBITDA ratio is only about 9. I've long wondered why it is that McDonald's, which is the premier name in fast food and has implemented a long-lasting turnaround over recent years, has long showed a lower multiple than its rivals Wendy's
The Golden Arches may be a popular place to grab a quick meal off the value menu, but it seems they are also a perfectly reasonable place for investors to put their money for the long term, with the company's current success in running its business. It's no wonder the stock looks appetizing to many investors these days.
For more on Mickey D's, drive through for some fast and Foolish content:
- Rick Munarriz recently commented on McDonald's tasty turnover.
- Flash back to last quarter's results.
- Is a food fight gearing up for the fast-food giant?
Alyce Lomax does not own shares of any of the companies mentioned.