Friday saw a record high for McDonald’s stock as Wall Street praised the company’s third quarter performance.
McDonald’s announced third-quarter consolidated revenues of $5.87 billion on Thursday, a year-over-year reduction that was better than Wall Street’s projections and that sparked the stock to rise to new heights. In 1965, the business went public.
On Friday, the share price increased to over $274, an increase of nearly 3% for the day.
Following the outcomes, Cowen increased its price target from $280 to $293. Andrew Charles, an analyst at Cowen Restaurants, stated in a note on Thursday that “[McDonald’s] tried-and-true approach to drive U.S. outperformance” gives him hope.
By increasing its prices, the fast food restaurant company has been able to increase sales. The average annual price increase for McDonald’s in the US during the third quarter was roughly 10%.
Recent promotions for the burger company that highlighted its signature dishes, such as adult Happy Dinners and celebrity meals, were successful. Sales at McDonald’s US locations open for at least 13 months increased 6.1% in the third quarter.
Companies must be careful not to lose too many clients as they increase the costs for their items across the board. To provide customers with less expensive options, businesses like Coca-Cola and PepsiCo are offering food and drinks in smaller packages (even if they get a worse deal on those items). The share price of PepsiCo also reached a record high.
By concentrating on value, one may maintain a consumer base while rising pricing.
Because they still view McDonald’s as an affordable brand, consumers are “ready to endure” price hikes, CEO Chris Kempczinski said during a conference call with analysts on Thursday to review the third-quarter results. In fact, according to CFO Ian Borden during the call, McDonald’s has been growing its market share “among low-income consumers.”
According to Borden, McDonald’s is “positioned as the top brand in terms of value for money and affordability,” noting that some customers are substituting value items for meals in order to save money. The business has been leveraging its rewards program to encourage client loyalty. Kempczinski stated that “our loyalty program is driving growth and exceeding expectations.”
In addition, McDonald’s has a history of performing well when the economy is in trouble. In reference to the financial crisis of 2008 and 2009, Borden stated, “Our business performed well in that previous downturn.” “We anticipate doing well in this environment, at least relative to our competition,” the company stated.
News Summary:
- McDonald’s stock rises to a record level
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