The Death of Growth at McDonald’s

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McDonald’s Corp. (NYSE: MCD) released its latest data on same-store sales growth. As the title of this post suggests, McDonald’s has run into a growth problem. We cannot figure out how it can maintain any future growth at this rate, compared to the past decade.

October global same-store sales increased by a mere 0.5%, versus a gain of only about 0.1% expected by the analysts who project this figure. Same-store sales growth of 0.2% in the United States was slightly under projections.

Europe was a slight positive at a gain of 0.8% on the region’s same-store sales. This figure was driven by gains in France, the United Kingdom and Russia, with a slight drag in Germany. We saw that October’s APMEA (Asia/Pacific, Middle East and Africa) comparable sales were down by 2.8%.

One issue to consider is an extra day shift, and then there were also promotions of the Mighty Wings, a new wrap and the Pumpkin Spice Latte.

What we have a hard time with is that McDonald’s shares are still trading around $97, in a 52-week range of $83.31 to $103.70. The consensus price target is just over $104 for the next year. The growth rates are just not there for the time being, and we are not sure how McDonald’s will entice and reward investors in the next two years like it did from 2010 to 2012.