Flipping Burgers And Beating The Bears: McDonald's Digital Dominance Outpaces Recession Fears

TD Cowen analyst Andrew M.Charles reiterated an Outperform rating on the shares of McDonald's Corp MCD with a price target of $315.
McDonald's reported 1Q adjusted EPS of $2.63, that beat the analyst's $2.35 estimate.
The beat was top-line-driven by global same store sales +12.6% that were consistent across all 3 segments, said the analyst.
Across MCD's Top 6 markets, digital accounted for nearly 40% of sales, up from over 35% in 4Q22, added the analyst.
The U.S. segment contributed $0.08 of the beat as stronger sales led to 14.3% company margins and franchise margins of 80.1% versus the analyst's estimates.
The earnings release made reference to positive traffic, with segment strength driven by digital & delivery, effective marketing campaigns featuring the core menu growth & operational enhancements, said the analyst.
1Q23 comparable sales of 12.6% beat the analyst's 10% estimate and 8.6% consensus metrix.
MCD noted strength across The Big 5 (France, Germany, the U.K., Australia and Canada) that the analyst argues further downplays the bear case of a European recession.
While the analyst understands management's base case for a deeper & prolonged European recession in 2023 relative to the U.S., the analyst highlights the brand's greater scale in Europe, where the brand is larger than the next 9 competitors combined.
Price Action: MCD shares are trading lower by 1.047% at $290.14 on the last check Tuesday.

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