Deutsche Bank Trimming McDonald's EPS Slightly

According to a research report published today by Deutsche Bank, McDonald's MCD current and projected sales trajectory are quite good, but EPS must be trimmed slightly due to higher f/x and tax rate. Deutsche Bank commented in the report, “MCD posted 4Q11 EPS of $1.33 vs. DBe/consensus of $1.29/$1.30. Rev. was slightly above our model (+0.6%) due to upside on Dec comps (+9.6% globally vs. DBe +6.5%). Core restaurant profits were slightly below our model ($856mm vs. $861mm) due to higher food costs (restaurant margin 18.7% vs. DBe 19.0%). Franchise profits were basically in line ($1.858bn vs. $1.856bn). Most of the 4c upside on the qtr. was driven by higher Other Income (+2c) and a lower tax rate (+2-3c). Int. exp. also helped by 1c. These items were partly offset by a higher share count, which hurt by 1c. (MCD only repurchased $344mm of stock during 4Q vs. our est. of $700mm.) F/x was neutral to EPS vs. our est. of +2c.” Deutsche Bank reiterates its Buy rating and $108.00 PT on McDonald's, which closed yesterday at $98.75.