McDonald's Corporation is scheduled to report its Q2 2010 results after the market closes on July 22, 2010. Analysts expect another quarter of strong gains in the important measure of revenue in locations open at least a year. Revenue has risen the past two quarters from a year earlier, and net income has climbed for the past three. In addition, McDonald's keeps outperforming most of its competitors, who have increasingly responded by pushing value menus and offering discounts.
McDonald''s Corporation develops, operates, franchises and services a worldwide system of restaurants that prepare, assemble, package and sell a limited menu of value-priced foods. The company operates primarily in the quick-service hamburger restaurant business. All restaurants are operated by the company or, under the terms of franchise arrangements, by franchisees who are independent third parties, or by affiliates operating under joint-venture agreements between the company and local business people.
As for Q1 2010, global comparable sales increased 4.2%, with the U.S. up 1.5%, Europe up 5.2% and Asia/Pacific, Middle East and Africa up 5.7%. Combined operating margin improved 220 basis points to 29.8%. Diluted earnings per share were $1.00, up 15% (9% in constant currencies) including a $0.05 per share currency benefit and returned $1.0 billion to shareholders through share repurchases and dividends. For the first quarter, performance in France, Russia and the U.K. drove Europe's operating income up 23% (14% in constant currencies). APMEA's operating income increased 27% (9% in constant currencies), led by results in Australia and China.
Analysts' estimates for Q2 2010 range from a low of $1.08 to a high of $1.17, compared to a consensus estimate of $1.12, with number of estimates being 20 and a coefficient variance of 1.97. U.S. business momentum continued with May comparable sales increasing 3.4%.Results were fueled by McDonald's compelling food and beverage value offerings, the recent addition of Frappes to the McCafe line-up and the popularity of the Shrek-themed Chicken McNugget and Happy Meal promotions. In Europe, the Company's strong performance continued as May comparable sales increased 5.7% driven by positive sales growth in France, Germany, the U.K.and Russia. Europe's focus on four-tier menus, daypart expansion and the introduction of relevant new products like the McWrap in Germany drove the segment's results. Comparable sales were up 3.8% in Asia/Pacific, Middle East and Africa (APMEA) reflecting broad-based strength across the segment, led by Australia and China. Systemwide sales increased 5.5%, or 6.2% in constant currencies for the month. On May 19, 2010, McDonald's Board of Directors declared a quarterly cash dividend of $0.55 per share of common stock, payable on June 15, 2010, to shareholders of record at the close of business on June 1, 2010. Revenue is expected to roll in at $5,957.5 million, with operating income likely to reach $ 1,833.1 million. Net income will be in the range of $ 1,203.7 million and EPS - operating (diluted) $1.12. The GAAP EPS should likely be $1.11.
The stock closed $70.11 on July 22, 2010 and most analysts' rate this stock as a relative Overweight with an average price target of $79.
