Mcdonalds (MCD) earnings release review for the 1st quarter of their 2021 fiscal year
Category: Mcdonalds (MCD)
Date: 17 June 2021 Stock Price of Mcdonalds (MCD): $235.58 Market Capital of Mcdonalds: $175.8 billion We take a look at the 1st quarter earnings report of their 2021 fiscal year of Mcdonald's the world's largest burger franchise company. For the quarter the group reported revenues of $5.12 billion and net income of $1.3 billion.
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Our first quarter 2021 global comparable sales and revenues surpassed first quarter 2019 levels, even as resurgences and operating restrictions persist in many parts of the world. I continue to be inspired by the resilience of our crew members, franchisees, suppliers, and company employees as we lead with our values and stay true to our purpose of feeding and fostering communities - McDonald's President and Chief Executive Officer Chris Kempczinski."
About Mcdonalds
The McDonald Brothers
Dick and Mac McDonald moved to California to seek opportunities they felt unavailable in New England. Failing in the movie business, they subsequently proved successful in operating drive-in restaurants. In 1948 they took a risk by streamlining their operations and introducing their Speedee Service System featuring 15 cent hamburgers. The restaurant’s success led the brothers to begin franchising their concept—nine becoming operating restaurants.
Ray Kroc
A native Chicagoan, Ray Kroc left high school after his sophomore year to join the World War One Red Cross Ambulance Corps. The war ended before his unit was sent overseas with Ray returning home to earn a living as a musician and later selling paper cups. In 1939, he became the exclusive distributor of the Multimixer (a milkshake mixing machine). He visited the McDonald brothers in 1954 which led to him becoming their franchise agent. He opened up the first restaurant for McDonald’s System, Inc., a predecessor of McDonald’s Corp. in Des Plaines, Illinois in April, 1955. McDonald’s acquired the rights to the brother’s company in 1961 for $2.7 million.
Going Global
Ray Kroc’s vision was that there would be 1,000 McDonald’s restaurants solely in the United States. Yet, McDonald’s continued to grow and expand into international markets beginning in 1967 opening in Canada and Puerto Rico. Today, the company has over 36,000 restaurants in over 100 nations. The most recent opening in Kazakhstan in 2016.
Dick and Mac McDonald moved to California to seek opportunities they felt unavailable in New England. Failing in the movie business, they subsequently proved successful in operating drive-in restaurants. In 1948 they took a risk by streamlining their operations and introducing their Speedee Service System featuring 15 cent hamburgers. The restaurant’s success led the brothers to begin franchising their concept—nine becoming operating restaurants.
Ray Kroc
A native Chicagoan, Ray Kroc left high school after his sophomore year to join the World War One Red Cross Ambulance Corps. The war ended before his unit was sent overseas with Ray returning home to earn a living as a musician and later selling paper cups. In 1939, he became the exclusive distributor of the Multimixer (a milkshake mixing machine). He visited the McDonald brothers in 1954 which led to him becoming their franchise agent. He opened up the first restaurant for McDonald’s System, Inc., a predecessor of McDonald’s Corp. in Des Plaines, Illinois in April, 1955. McDonald’s acquired the rights to the brother’s company in 1961 for $2.7 million.
Going Global
Ray Kroc’s vision was that there would be 1,000 McDonald’s restaurants solely in the United States. Yet, McDonald’s continued to grow and expand into international markets beginning in 1967 opening in Canada and Puerto Rico. Today, the company has over 36,000 restaurants in over 100 nations. The most recent opening in Kazakhstan in 2016.
Overview of Mcdonalds' 1st quarter 2021 earnings report
First quarter financial performance:
Breakdown of Mcdonalds stores per country (looking at some of their bigger markets in terms of number of stores)
- Global comparable sales increased 7.5%, reflecting positive comparable sales across all segments: 13.6% in the U.S.; 0.6% in the International Operated segment; and 6.4% in the International Developmental Licensed segment.
- Consolidated revenues increased 9% (5% in constant currencies).
- Systemwide sales increased 12% (8% in constant currencies).
- Consolidated operating income increased 35% (30% in constant currencies) and included $135 million of strategic gains primarily related to the sale of McDonald's Japan stock. Excluding these gains, operating income increased 27% (22% in constant currencies).
- Diluted earnings per share of $2.05 increased 39% (35% in constant currencies). Excluding $0.13 per share of strategic gains, diluted earnings per share was $1.92 for the quarter, an increase of 31% (27% in constant currencies).
Breakdown of Mcdonalds stores per country (looking at some of their bigger markets in terms of number of stores)
- United States 13,837
- Australia 999
- Canada 1,478
- France 1,485
- Germany 1,484
- Italy 597
- Poland 442
- Russia 732
- United Kingdom 1,323
- Saudi Arabia 310
- South Africa 299
- Turkey 253
- United Arab Emirates 179
- India 315
- Philippines 669
- China 3,383
Mcdonalds' management commentary on their 1st quarter 2021 earnings report
CHICAGO, IL - McDonald's Corporation today announced results for the first quarter ended March 31, 2021.
“Our first quarter 2021 global comparable sales and revenues surpassed first quarter 2019 levels, even as resurgences and operating restrictions persist in many parts of the world. I continue to be inspired by the resilience of our crew members, franchisees, suppliers, and company employees as we lead with our values and stay true to our purpose of feeding and fostering communities,” said McDonald's President and Chief Executive Officer Chris Kempczinski. “Our teams around the world are focused on executing our Accelerating the Arches strategy at the highest level - we're maximizing our marketing in a culturally relevant way, committed to the great tasting customer favorites on our core menu and doubling-down on digital, delivery and drive thru to create a faster and easier customer experience.”
“Our first quarter 2021 global comparable sales and revenues surpassed first quarter 2019 levels, even as resurgences and operating restrictions persist in many parts of the world. I continue to be inspired by the resilience of our crew members, franchisees, suppliers, and company employees as we lead with our values and stay true to our purpose of feeding and fostering communities,” said McDonald's President and Chief Executive Officer Chris Kempczinski. “Our teams around the world are focused on executing our Accelerating the Arches strategy at the highest level - we're maximizing our marketing in a culturally relevant way, committed to the great tasting customer favorites on our core menu and doubling-down on digital, delivery and drive thru to create a faster and easier customer experience.”
Related Topics
RESTAURANT UPDATE
The Company has continued to follow the guidance of expert health authorities to ensure the appropriate precautionary steps are taken to protect the health and safety of our people and our customers.
As a result of COVID-19 resurgences, throughout the quarter there have been numerous instances of government restrictions on restaurant operating hours, limited dine-in capacity and, in some cases, mandated dining room closures particularly in the International Operated Markets. These restrictions are impacting most of the Company's markets across Europe, particularly those with fewer drive thru restaurant locations. The Company expects some restrict
The Company has continued to follow the guidance of expert health authorities to ensure the appropriate precautionary steps are taken to protect the health and safety of our people and our customers.
As a result of COVID-19 resurgences, throughout the quarter there have been numerous instances of government restrictions on restaurant operating hours, limited dine-in capacity and, in some cases, mandated dining room closures particularly in the International Operated Markets. These restrictions are impacting most of the Company's markets across Europe, particularly those with fewer drive thru restaurant locations. The Company expects some restrict
Mcdonalds (MCD) stock chart for the last 5 years
The image below shows the stock price history of Mcdonalds over the last 5 years. And the stock has provided excellent returns for the group's stockholders over the last 5 years. With the stock increasing by 92.8% over the last 5 years
The stock of Mcdonalds is trading at a little closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of McDonalds stock is positive at this point in time
The stock of Mcdonalds is trading at a little closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of McDonalds stock is positive at this point in time
Mcdonalds (MCD) stock vs Chipotle (CMG) stock
The image below shows the stock price performance of Mcdonalds (MCD) and Chipotle (CMG) over the last 3 years. And while they are both active in the quick serve food industry their stock price returns provided are vastly different. Over the last 3 years they provided the following returns to stockholders:
- Chipotle (CMG): 238.8%
- Mcdonalds (MCD): 92.8%
Mcdonalds (MCD) latest stock valuation
So based on Mcdonald's latest earnings report, what is our target price for Mcdonalds? Based on Mcdonalds latest earnings release our valuation model provides a target price (full value price) at $179.30 a stock (up from our last McDonalds earnings valuation). We therefore believe the stock of Mcdonalds is overvalued
We therefore believe from a fundamental investing and value perspective the stock price of Mcdonald's is overvalued and we would not recommend buying into the stock at its current price, but rather at levels about 10% below our target price which is at $179.30 a stock. A good entry point into the stock of Mcdonalds is at $161.40 or below.
We expect the stock of Mcdonalds to pull back from its current levels to closer to our target price in coming weeks and months. We therefore rate the stock the of Mcdonalds as a sell
We therefore believe from a fundamental investing and value perspective the stock price of Mcdonald's is overvalued and we would not recommend buying into the stock at its current price, but rather at levels about 10% below our target price which is at $179.30 a stock. A good entry point into the stock of Mcdonalds is at $161.40 or below.
We expect the stock of Mcdonalds to pull back from its current levels to closer to our target price in coming weeks and months. We therefore rate the stock the of Mcdonalds as a sell
Next earnings release of Mcdonalds
It is expected that Mcdonalds 2nd quarter 2021 earnings release will be released in late July 2021