McDonald’s (MCD) stock price has burned off some fat.
At $275, shares of the Golden Arch’s haven’t been this low since August 2024. The stock is down 10% year to date versus a nearly 3% gain for the Dow Jones Industrial Average (^DJI), pressured of late by a slide following lackluster first quarter earnings a week ago.
Wall Street’s vibe on McDonald’s: Many of the post-earnings analyst notes on McDonald’s last week capture the Street’s disappointment. Analysts were looking for more from McDonald’s on the top and bottom lines amid the hoopla around the Big Arch burger debut and new value offerings.
Stifel analyst Chris O’Cull captures the sentiment on McDonald’s well: “McDonald’s delivered resilient 1Q results with 3.8% global comps and maintained U.S. market share, yet the outlook remains clouded by a sequential deceleration across all segments heading into 2Q.”
“While the company is aggressively leaning into value and leveraging the ‘three-for-three’ playbook internationally, we remain cautious because the underlying fundamentals lack the momentum needed for a rating upgrade,” O’Cull wrote. “However, following the recent pullback, the stock appears oversold, potentially offering a short-term trade for tactical investors ahead of easier U.S. comparisons in May/June and the September Investor Day in Chicago; although the 4Q lap is a doozy. Despite this potential for a near-term bounce, we remain Hold-rated as we wait for clearer signs of outperformance.”
The competitive backdrop in fast food: Restaurant Brands (QSR) said last week that its Burger King US chain delivered a 5.8% same-store sales increase in the first quarter, powered by consumers falling back in love with the Whopper amid improvements such as creamier mayo and a fluffier bun.
That result outperformed the quick-service restaurant industry by more than five points, Bernstein analyst Danilo Gargiulo said.
It also bested McDonald’s — its US business posted a same-store sales increase of 3.9% in the first quarter on Thursday. A McEgg on McDonald’s face, the quarter lagged versus BK despite the introduction of the new Big Arch burger — and CEO Chris Kempczinski going viral for taking a wimpy bite of it in a social media video.
“It’s a zero-sum game. It’s not a growing category,” Burger King US president Tom Curtis (who also went viral in his response to Kempczinski’s video) told Yahoo Finance. “But we’ve proven to ourselves that if you do offer a better experience and a better core product, you can absolutely grow.”
Elsewhere in fast food, Yum Brands (YUM)-owned Taco Bell saw same-store sales rise 8% in the first quarter. Starbucks (SBUX) had a comeback quarter, CEO Brian Niccol told Yahoo Finance, with US same-store sales gaining 7.1%.
