Any semblance of sizzle has been pounded out of McDonald’s (MCD) stock.
Shares of the high-calorie fast food seller dropped below $230 for the first time in more than four years on Monday.
Today’s move is being driven by a relatively bearish note from Guggenheim analyst Gregory Francfort.
“It seems difficult to get positive on shares now without better evidence of a catalyst path over the next 12 months,” Francfort said. “1Q27 comparisons do seem to get a lot easier than the Street models, which could be a catalyst, but we would like to see fundamental reasons that MCD’s franchisees are buying into entry level value menu efforts or ops improvements than can drive traffic.”
Francfort maintained a Neutral rating on McDonald’s stock.
232.70 +0.81 (+0.35%)
As of 3:49:34 PM EDT. Market Open.
The sell-off is getting downright startling for a thought-to-be blue-chip name like Mickey D’s:
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McDonald’s stock past five days: -1%
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McDonald’s stock past month: -9.2%
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McDonald’s stock past six months: -24.43%
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McDonald’s stock year to date: -24.05%
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McDonald’s stock past year: -22.9%
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McDonald’s stock past five years: -5.34%, versus the S&P 500’s (^GSPC) +77% and the Dow Jones Industrial Average’s (^DJI) +47.52%
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Burger King, Tim Horton’s, and Popeyes owner Restaurant Brands (QSR) stock past five years: +12.4%
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Yum! Brands (YUM) (owns Taco Bell and KFC, just sold Pizza Hut) stock past five years: +11.2%
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McDonald’s stock since CEO Chris Kempczinski was named as CEO on Nov. 3, 2019: +19.57% vs. +153.4% for the S&P 500 and +87.44% for the Dow Jones Industrial Average.
It has been a brutal year for McDonald’s — lots of red flags for investors to choose from the proverbial menu.
Second quarter comparable sales for Restaurant Brands’ resurgent Burger King US rose 8.5% year over year, beating analyst expectations, per Yahoo Finance AlphaSpace data. The result trounced McDonald’s US result, which reported a disappointing 0.8% comparable sales gain.
A revamped McValue platform, discounted breakfast offers, and a broader push into specialty beverages all failed to generate the incremental traffic McDonald’s was banking on in the second quarter.
Execs also acknowledged execution issues.
“We don’t have a strategy problem. We simply didn’t execute at the level we needed to in the second quarter,” Kempczinski told analysts on the second quarter earnings call.
A high-profile investor day in its Chicago backyard two weeks ago was designed to reignite a bull case for the stock. It fell flat on its face as McDonald’s surprised some on the Street by outlining an $8.5 billion franchisee support package. Traffic trends were also hinted at staying under pressure in key markets amid elevated inflation weighing on households.