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Chilton increases position in McDonald’s

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Nov. 20 2020, Updated 11:46 a.m. ET

Chilton Investment Company and McDonald’s

Chilton added new positions in Actavis Plc (ACT), Medtronic Inc. (MDT), Wynn Resorts Ltd. (WYNN), and Priceline Group Inc. (PCLN). It sold stakes in Occidental Petroleum (OXY). The fund increased positions in TransDigm Group Inc. (TDG), HomeDepot Inc. (HD), and McDonald’s Corp. (MCD). The fund lowered its positions in Dollar General (DG) and Walmart (WMT).

Chilton Investment Company increased its position in MCD. It accounts for 0.96% of the fund’s third quarter US long portfolio.

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About McDonald’s

MCD is a fast food restaurant. It offers limited service. It has more than 35,000 restaurants in over 100 countries. It employs more than 4 million people. It serves 70 million customers per day.

According to IBISWorld, MCD had the largest share in the fast food restaurant industry in 2014. Its share was 17% in the US.

Third quarter revenue decreased across all segments

MCD reported revenues of $6,987 million in the third quarter. This was a 4.5% decline—compared to revenues of $7,323 million in the same quarter last year.

MCD reported a diluted earnings per share, or EPS, of $1.09. It declined by 28% due the issue with the Chinese supplier, higher tax rates, and store closures in Ukraine and Russia.

The company reported an operating income of $2.1 billion—a 14% decline from $2.4 billion in the same quarter last year. Operating profit margins also declined from 33% to 29.7%, as a percentage of sales.

The global same-stores sales were down to 3.3% year-over-year, or YoY. It had a maximum decline of 9% in APMEA (Asia Pacific, Middle East and Africa).

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Management’s third quarter initiatives

In the US, MCD worked towards letting customers personalize their orders through the “Create Your Taste” concept. This allows a customer to build an order based on personal preferences. MCD is also working to give its restaurants more autonomy in the US. Restaurants will be able to offer locally-relevant food to the customers. This could mean that new menu items—like the Bacon Clubhouse Burger, the Cheddar Bacon Onion Sandwich, mozzarella sticks, and the Chorizo Burrito—would be available at different locations. The items wouldn’t be available at all MCD restaurants.

Quarterly dividends

The company raised its quarterly dividends by 5%. It distributed $0.85 per share to its investors. MCD returned a total of $4.6 billion to its shareholders during the first three quarters of 2014.

It had a three-year cash return target of $18–$20 billion. Among its competitors, McDonald’s had the highest dividend yield of 3.52%.

To learn more about MCD’s third quarter earnings, read Why McDonald’s 3Q14 earnings were disappointing.

The next part in this series will discuss Chilton’s lower position in DG.

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