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McDonald's Earnings Weren't All Bad -- Chew on These 2 Positives

Credit: The Street
Published on October 22, 2019 - Duration: 01:24s

McDonald's Earnings Weren't All Bad -- Chew on These 2 Positives

McDonald's investors weren't feasting on the stock post earnings, but there were two big positives that reflect important strides the company is making.

The stock was falling 3.32% to $202.89 Tuesday, after the fast-food giant missed earnings and revenue expectations for the third quarter.

Before we dive into the positives, here were the results: Earnings per share came in at $2.11, missing Wall Street's estimates of $2.21.

Total revenue was $5.4 billion, missing analysts expectations of $5.5 billion.

U.S. same-store-sales growth was 4.8%, missing expectations of 5.2%.

But one reason for the miss is reflective of one of the company's long-term strengths.

Tech and Digital The company said one reason, of several, for the earnings miss was heavier upgrades to technology.

McDonald's has advanced in-store technology that improves speed and efficiency and it also has a strong focus on its app, through which it delivers mobile orders.

One theme in restaurants and fast-food has been that the tech focused chains largely see strong results.

McDonald's shares are up 18.75% year-to-date, roughly in line with the broader U.S. market, but still a decent gain.

Chipotle , which had a strong digital focus is up 92% on the year, of course with other factors contributing to that gains as well.

Starbucks has a heavy focus on tech and digital improvements and is up 32% this year.

Global Business McDonald's posted global same-store-sales growth of 5.9%, versus expectations of 5.6%.

U.S. revenue only comprises roughly 36% of revenue, leaving the other 64% to the international stage.

Investors would certainly be happy to see the global business thrive, as the company counts on the larger segment for a huge portion of results.

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