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McDonald’s Shares Holding At Key Support

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Earnings Beat, Revenues Miss

Shares in iconic US restauranteur McDonald’s have been a little higher over recent trading in response to a better than expected set of Q4 earnings. The company’s stock price has been under selling pressure over recent months. Shares have dropped around 12% from the 2020 highs posted in October.

In Q4, McDonald’s reported earnings per share of $1.83 versus $1.77 expected. With this period of earnings growth, the company put an end to the losing streak of the prior two consecutive quarters. Despite the headline earnings beat, revenues were a little lower than expected at $5.31 billion. This was versus the $5.37 billion Wall Street was looking for.

Site Closure Costs Creating Drag

Describing the quarter, McDonald’s said that restaurant closure costs of around $30 million as well as lower gains on sales of closed restaurants had a downward impact on performance. However, there were some bright spots in the report.

The company noted that same-store sales in the US had rebounded for the second consecutive quarter with a growth of 5.5%. The firm attributed this growth to promotional activity and new items such as the Triple Cheeseburger over the quarter. They further noted that the recent trend of consumers spending more per order had continued also.

International Markets Struggling

The company’s international operated markets division, which includes countries such as France and Germany, was the worst-performing. This sector saw same-store sales falling by 7.4% as a resurgence in COVID cases saw the return of widespread national lockdowns across the eurozone. Interestingly, however, despite the ongoing lockdowns in the UK over the quarter, same-store sales were seen remaining the same.

Elsewhere, the earnings release highlighted that the group’s international developmental licensed markets section was also in the red, though slightly less at -6.3%. Japan actually saw firm growth in same-store sales though this wasn’t enough to offset the negative growth seen in other parts of Asia as well as Latin America.

Looking ahead, the company forecasts systemwide growth over 2021 as a result of the projected economic rebound and relaxing of social restrictions in key markets.

MCD Bear Trend Continues

macdonalds shares

Following the failure at the 231.91 level last year, MCD shares have since been trading within a bearish channel. Price has recently found support at a test of the 202.36 level though.

While within the bearish channel, the focus is on further downside in the near term. Should price break below the 202.36 level, the next support level to watch is the 190.46 level.

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