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1 Restaurant Stock to Buy and Hold for Decades

November 16
11:19 2022

Leading foodservice retailer McDonald’s Corporation (MCD – Get Rating) operates and franchises McDonald’s restaurants with nearly 40,000 locations in over 100 countries. The company reported impressive financials in the third quarter ended September 30, 2022.

MCD beat the consensus EPS and revenue estimates in the last reported quarter. Its EPS and revenue were 3.9% and 3% above analyst estimates. Its global comparable sales rose 9.5% year-over-year, while the U.S. comparable sales increased 6.1%.

MCD’s President and CEO Chris Kempczinski said, “Our third quarter 2022 performance demonstrated broad-based business momentum as global comparable sales increased nearly 10%. I remain confident in our Accelerating the Arches strategy as our teams around the world continue to execute at a high level.”

“As the macroeconomic landscape continues to evolve and uncertainties persist, we are operating from a position of competitive strength. I also want to thank our franchisees, who have done a tremendous job navigating this environment, while providing great value to our customers,” he added.

MCD’s strong fundamentals have allowed it to raise dividends for 46 consecutive years. Its dividend payouts have increased at a 6% CAGR over the past three years and an 8% CAGR over the past five years. Its current dividend yield is 2.23%, while its four-year average yield is 2.27%. The company will pay a quarterly dividend of $1.52 on December 15, 2022.

The stock has gained 1.6% in price year-to-date and 8.6% over the past year to close the last trading session at $272.27.

Here’s what could influence MCD’s performance in the upcoming months:

Robust Financials

MCD’s revenues from franchised restaurants increased 4.6% year-over-year to $3.67 billion for the third quarter ended September 30, 2022. Its total operating costs and expenses declined 3.3% year-over-year to $3.10 billion.

The company’s non-GAAP net income for nine months ended September 30, 2022, increased 5.3% year-over-year to $5.58 billion, and its non-GAAP EPS rose 6.5% year-over-year to $7.51.

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