Shares of McDonald’s (NYSE:MCD) jumped more than 6% on Wednesday after the restaurant giant’s profits topped investors’ expectations.
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McDonald’s value-focused strategy is resonating with customers
McDonald’s global systemwide sales rose 4% to over $38 billion in the third quarter, driven by new store openings and higher sales at existing locations.
Global comparable sales, which measure revenue at restaurants open for at least thirteen months, grew 1.5%, fueled by growth in international markets. Yet U.S. comps were down slightly by 0.2%.
McDonald’s, like many restaurant chains in the U.S., is dealing with slowing traffic as cash-strapped consumers dine out less often. McDonald’s is revamping its value-priced offerings in response to this trend. The strategy appears to be working.
“In the U.S., performance improved as the quarter progressed, with comparable sales turning positive in September, following a slightly negative result in July and August,” CEO Chris Kempczinski said during a conference call with analysts.
Shareowners have larger dividends headed their way
All told, McDonald’s adjusted operating income climbed 8%. Its adjusted earnings per share, in turn, jumped 11% to $3.57. That was nicely above Wall Street’s estimates of $3.38.
This strengthening profitability enabled the passive-income-producing stalwart to raise its quarterly cash payout to investors by 4% to $1.93 per share. McDonald’s has now increased its dividend for a remarkable 50 straight years.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.
