Analyst: Plenty To Be Encouraged About In McDonald's Q3 Report

Investors have plenty of reasons to be encouraged by McDonald's Corporation MCD's third-quarter earnings report, according to Morningstar's senior analyst R.J. Hottovy.

Perhaps the most notable aspect of McDonald's earnings report was a 4.1 percent growth in U.S. comps, Hottovy said as a guest on CNBC's "Squawk Box" segment. This is encouraging when considering the metric includes the impact of multiple hurricanes throughout the quarter and was driven by strong demand from various promotions and initiatives.

McDonald's growth through promotional activity is a legitimate reason for investors to be concerned — but this isn't the case, Hottovy said. McDonald's third quarter benefited from sales of premium menu items which implies "both ends of the barbell are working."

"I think you need to have the promotional activity to drive traffic, the ice beverage platform was very successful," he said. "But at the other end they are seeing traction on the premium side which is bringing back some customers they may have lost. I think its part of the broader playbook to regain a lot of those lost customers."

McDonald's third-quarter momentum will likely continue throughout the fourth quarter as many of the ongoing initiatives, such as mobile ordering, continue to be rolled out to new stores, he also said.

Finally, McDonald's international segment is also performing well, which helps set up the company for a mid-single digit comp growth profile for at least the near-term.

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