Can McDonald’s Corporation (MCD) Get Out of its Troubles?


McDonald’s Corporation (NYSE:MCD) faced some heat due its yet again disappointing sales number, but some people are still positive on the stock. The company is thinking about returning extra cash to shareholders and might raise its dividend on September 25. A lot of people are negative on McDonald’s Corporation (NYSE:MCD), because apart from dropping sales in U.S., the company is facing a lot of issues in Russia and China. That is true, but again, issues in Russia and China are not being faced by McDonald’s Corporation (NYSE:MCD) alone, but rather all major Fast food companies are facing them. Stephanie Link, Co-Portfolio Manager of Action Alerts Plus, is optimistic on McDonald’s Corporation (NYSE:MCD) and she recently discussed the reason for that on TheStreet.

McDonald's Corporation

“[…] The stock, by the way, underperformed its peers in 2013 by 40% and 14% year to date, so expectations are very very low, for good reasons. They haven’t delivered, so I understand that, but I think the 10% drop from its high, now yield is about 3.5%, makes it interesting, because I think there is value to their franchise,” Link said.

According to Link, whatever is happening in Russia and China, McDonald’s Corporation (NYSE:MCD) cannot be blamed for it. According to her, since both countries contribute only 5% to McDonald’s Corporation (NYSE:MCD)’s operating profit, the problems there are not going to significantly impact the company. Link feels that McDonald’s Corporation (NYSE:MCD) needs to pay more importance to the U.S. and improve here, as the U.S. contributes 31% of the company’s sales.

She believes that if McDonald’s Corporation (NYSE:MCD) can improve on its operating profits in the U.S., the company will be able to replicate the same model across the world, which will improve the company’s results.

As of June 30, 2014, Jim Simons‘ Renaissance Technologies owns over 8.2 million shares in  McDonald’s Corporation (NYSE:MCD).

Disclosure: None

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