McDonald’s (NYSE: MCD) is a leader in the fast-food industry, and it’s an iconic brand all over the world. The challenge, however, is that when a business reaches a massive size, it becomes much harder for it to grow quickly. And the company’s recent results highlight that, as they were fairly modest.
Can McDonald’s still be a top stock to buy right now, or are its best days behind it?
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
Comparable sales were light in the company’s most recent quarter
Last week, McDonald’s reported its latest quarterly results for the period ending June 30. The numbers weren’t great. While its total sales rose by 5% year over year, its comparable store sales growth rate was much more modest, coming in at just 1.3%. And in the U.S. market, it was just 0.8%.
Comparable store sales look at how much revenue the company is generating from existing locations versus the same locations in the prior-year period. Thus, it’s reflective of the organic growth the business is generating, and it excludes the boost it gets from opening new stores.
What’s concerning is that in April, the company expanded its value offerings, including the launch of a new under $3 menu, and that hasn’t shown to be a huge catalyst, at least not in its early stages, anyway. At a time when consumers are looking to save on anything and everything, it’s a move that investors may have expected to be a catalyst for the fast-food business. But that hasn’t proven to be the case at all.
McDonald’s stock can still be a good buy, but it may not be ideal for growth investors
McDonald’s has a highly profitable and scalable business. But generating meaningful, organic growth may prove to be a challenge in a highly competitive fast-food…
..
