No matter how bad the economy gets,
McDonald's (NYSE: MCD) has seemed
immune to the recessionthus far. However, August's
same-store sales data from the fast food chain might prompt
some shareholders to choke on their Big Macs.
August comps rose only 2.2% overall at McDonald's. By
geographical segment, they rose a relatively anemic 1.7% in
the U.S., increased by a more robust 3.5% in Europe, and
actually declined by 0.5% in the Asia Pacific, Middle East,
and Africa segment.
Are those numbers really so bad, though? As continuously
solid same-store sales results stack up behind it, McDonald's
comps have begun to face some very difficult comparisons.
August's 2.2% increase compares to a whopping 8.5% increase
in the same period last year. Heck, go the extra mile and
look all the way back at its August 2007 data -- the company
increased comps by 8.1% back then.
Perhaps we can cut Mickey D's a little slack here. The
company's been on fire for quite some time now, despite
heated competition from fast-food rivals like
Yum! Brands (NYSE: YUM),
Burger King (NYSE: BKC),
Wendy's/Arby's (NYSE: WEN), and the slightly
more upscale
Starbucks (Nasdaq: SBUX).
And at 15 times earnings, McDonald's still looks a heck of
a lot more appetizing than many overstuffed restaurant
stocks. Some have surged beyond the bounds of logic in the
last six months. Witness
Cheesecake Factory (Nasdaq: CAKE), which is
currently trading at 26 times earnings; in the last 12
months, earnings per share have
dropped27%. Investors should expect few winners
among restaurant stocks, as the shaky economy prompts
potential diners to keep a death grip on their wallets.
Any investors tempted to ditch McDonald's shouldn't be too
hasty. Like
Wal-Mart Stores (NYSE: WMT), the Golden
Arches remain well-positioned to capitalize off consumers'
new frugality. Any weakness in Mickey D's shares would be a
great time to buy this stock. It's a leader in its industry,
a venerated blue-chip and a steady dividend payer -- all
pretty darn appetizing ingredients these days.
Pick up some hot, fast related
Foolishness:
the fall of the Golden Arches?
Were investors
still lovin'McDonald's in June?
In April, McDonald's
defied the recession.
This article was originally published as
Is the Recession Eating Away at McDonald's?on
Fool.com
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