McDonald’s Stock Struggles to Recover

By Douglas A. McIntyre Published Aug 12, 6:50AM EDT

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McDonald’s Stock Struggles to Recover — © Alst / Getty Images

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McDonald’s Corp. (NYSE: MCD | MCD Price Prediction) stock has not recovered since the fast-food giant released its earnings.
It is caught in the American inflation perception squeeze.
Also: Dividend legends to hold forever.

McDonald’s Corp. (NYSE: MCD) stock, battered by poor earnings and worries that inflation will keep customers away, has not posted a recovery since it released its earnings. Investors appear ready to sit through what could be months of deep problems. If customer perception of its food prices does not change, the wait could be longer.

Over the past year, McDonald’s share price is down 7% while the S&P 500 is up 22%, even after a broad market sell-off that started a month ago. The market has started to recover. McDonald’s has not.

Quartz has pointed out that the average price of McDonald’s menu items has doubled in the past decade. “Nevertheless, a study conducted by data firm FinanceBuzz concluded that McDonald’s has indeed raised its menu prices by an average of 100% over the last 10 years,” the business news website reports.

According to the consumer price index, inflation has dropped from over 8% two years ago to 3% recently. Yet, Americans still worry about rising costs. A new Pew poll reveals that 62% of Americans view inflation as “America’s greatest challenge.” “The public again sees inflation as one of the top problems facing the nation, with 62% saying inflation is a very big problem for the country – only slightly down from the 65% who said this last year,” Pew reports. This puts it above the cost of health care, drug addiction, and the federal budget deficit.

As is the case with what the Pew data show, even with inflation falling, Americans don’t “feel” it.

McDonald’s is caught in the American inflation perception squeeze. Even with $5 meals, which would seem a deal, consumers have not returned.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.