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Why McDonald’s Stock Soared 6.6% in November

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Dec. 5 2018, Published 1:43 p.m. ET

Stock performance

McDonald’s (MCD) stock rose 6.6% in November on investor optimism surrounding the company’s initiative to modernize its restaurants, which included the implementation of self-order kiosks, the remodeling of its restaurants, and the expansion of its deployment of the Experience of the Future initiative. The company’s stock price was also positively affected by Morgan Stanley’s upgrade on November 29. The upgrade led MCD to hit a 52-week high of $190.88 on the day.

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The company posted its third-quarter earnings results on October 23. During the quarter, it had reported adjusted EPS of $2.10 on revenue of $5.37 billion, outperforming analysts’ EPS expectation of $1.99 and their revenue estimate of $5.32 billion. The company also beat analysts’ SSSG (same-store sales growth) estimate of 3.6% with its SSSG of 4.2%. For a more detailed analysis of McDonald’s third-quarter earnings, read McDonald’s Expects Momentum to Continue after Strong Q3 2018.

Year-to-date performance

YTD (year-to-date), McDonald’s stock has returned 7.5%. The company’s strong performance in the third quarter mitigated the weakness the stock saw at the beginning of the year on concerns that more customers were opting for cheaper menu options with the introduction of the $1 $2 $3 Dollar Menu on January 1. McDonald’s stock fell to a 52-week low of $146.84 on March 2.

YTD, peers Starbucks (SBUX) and Wendy’s (WEN) have returned 16.1% and 6.3%, respectively. However, Jack in the Box (JACK) has fallen 11.9% YTD. Meanwhile, the broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which holds 16.1% in restaurant and travel companies, has returned 7.5% YTD.

Next, let’s look at analysts’ recommendations for McDonald’s.

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