Why McDonalds Stock Performed Better Than Peers In the Past Year
Despite a highly competitive restaurant market and an environment marked by significant inflation, McDonalds Corporation (NYSE:MCD) has outperformed its competitors in recent years. McDonald’s stock increased by 4.5% over the past year, in contrast to the 12.5% loss that the industry as a whole has experienced. The performance of McDonald’s is being helped along by its divided paying capabilities, a substantial increase in comparable metrics, expansion ambitions, and digital initiatives.
McDonald’s Stock Is a Great Long-Term Buy
It is anticipated that McDonalds (NYSE:MCD) will experience a long-term earnings growth rate of 8.4%. The company distributes a quarterly dividend of $1.38 ($5.52 annualized) per share, which results in a yield of 2.2% at the current McDonalds stock price. The payout ratio for McDonalds Stock is 56, and the company has had an 8% dividend growth rate over the past five years. Lets have a conversation about the factors that highlight why investors should keep holding onto McDonald’s stock despite the high inflation environment.
McDonalds (NYSE:MCD) has been concentrating its efforts on digitalization in order to fuel its expansion. Prior to the outbreak of the coronavirus, drive-thru restaurants were responsible for almost two-thirds of all sales in the United States. In spite of the reopening of dining rooms, the company reported that drive-thru sales in its top six markets are still strong in comparison to the levels that existed before the epidemic. The company said that during the second quarter of 2022, digital sales (which included transactions made through the mobile app, kiosks, and delivery) accounted for more than 30% of total sales across the entire system in its top six markets.
McDonalds (NYSE:MCD) impressive performance in terms of comparable sales growth in the second quarter of 2022 continues to win over investors. Comparable sales on a global scale increased by 9.7%, whereas in the same period of the prior year they increased by 40.5%. This is the sixth straight quarter in which comparable sales have increased.
Comparable sales increased over the first three months of the year in the United States by 3.7%, in internationally operated markets by 13%, and in the international developing licenced segment by 16%, respectively. Japan and Latin America both saw a substantial increase in their year-over-year comparisons. In Japan, the company recorded an increase in comparable sales for the 27th consecutive quarter.
McDonald’s Plans to Open Several Restaurants
McDonalds (NYSE:MCD) believes it has a significant potential to increase the value of all of its brands on a global scale by broadening its footprint in both existing markets and new ones. Performance is also being driven by the companys ongoing expansion activities. In spite of the epidemic, McDonald’s is continuing to increase its presence across the globe.
The company has plans to open more than 1,800 restaurants around the world in 2022, with 500 of those restaurants located in the United States and IOM market segment, and 1,300 of those locations located in the IDL market, with roughly 800 of those restaurants located in China. The business forecasts that the restaurant industry will expand by about 3.5% in 2022.
McDonalds remains committed to its loyalty program as a means of driving sales and increasing average checks. It is confident that the initiative will assist in expanding the consumer base as well as retaining existing customers. The company recorded an increase in the rate of digital engagement across all of the markets during the second quarter of 2022.
In response to customized loyalty messaging, a robust lineup of mobile app deals, and content offerings, McDonald’s (NYSE:MCD) reported an increase in the frequency of customer visits as well as an increase in incremental sales. In light of the growing prevalence of digital adoption, the business maintains its upbeat disposition and predicts that the initiatives will drive sales and average checks in the periods to come. At the moment, McDonalds operates customer loyalty programs in over 50 different markets, some of which include the United States of America, Germany, Australia, and Canada.
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Author: Stephanie Bedard-Chateauneuf
Market Jar Media Inc.
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