McDonald's Defensive Appeal Shined Bright In Q4, Analyst Says

Cowen analyst Andrew M. Charles reiterated an Outperform rating on the shares of McDonald's Corp MCD with a price target of $293.
McDonald's reported 4Q adj. EPS of $2.59, which beat the analyst's $2.44 estimate and $2.46 consensus.
The analyst noted that the IOM segment contributed the most to the beat ($0.07 of higher EPS), followed by the U.S. segment ($0.03 higher EPS), which was driven by strong comps & franchise margins that overshadowed softer company margins in both segments.
Further, a favorable tax rate provided a $0.03 benefit to EPS, the analyst added.
The analyst is pleased by Q4 U.S. same-store sales of 10.3%, which well exceeded the 8.0% estimate and 8.7% consensus metrix.
The analyst added that the release made reference to growth that was ticket-driven due to pricing, while traffic was also positive.
Sales were aided by growth in digital & delivery channels, as well as the success of October's limited-time Cactus Plant Flea Market Box & McRib, which the analyst believes drove a record month of sales.
The release made reference to strength concentrated in Germany, the U.K. and France, or Western Europe, where ironically investors were most concerned about a slowdown, the analyst mentioned.
The analyst believes the brand is benefiting from trade-down, aided by even greater scale in Europe vs. the U.S.
Price Action: MCD shares are trading lower by 1.87% at $265.83 on the last check Tuesday.
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