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2021-09-20
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McDonald's Growth In A Rebound Can Take It To New Highs
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":860032696,"tweetId":"860032696","gmtCreate":1632105977315,"gmtModify":1632802802396,"author":{"id":4088765540335620,"idStr":"4088765540335620","authorId":4088765540335620,"authorIdStr":"4088765540335620","name":"SyPP","avatar":"https://static.tigerbbs.com/d6cc31361b1b510cd857dcc7b50018f7","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":4,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>Great</p></body></html>","htmlText":"<html><head></head><body><p>Great</p></body></html>","text":"Great","highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":1,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/860032696","repostId":1103359237,"repostType":4,"repost":{"id":"1103359237","kind":"news","pubTimestamp":1632104834,"share":"https://www.laohu8.com/m/news/1103359237?lang=&edition=full","pubTime":"2021-09-20 10:27","market":"us","language":"en","title":"McDonald's Growth In A Rebound Can Take It To New Highs","url":"https://stock-news.laohu8.com/highlight/detail?id=1103359237","media":"Seeking Alpha","summary":"Summary\n\n2020 proved to be a challenging year, and while some headwinds to foot traffic have remaine","content":"<p><b>Summary</b></p>\n<ul>\n <li>2020 proved to be a challenging year, and while some headwinds to foot traffic have remained, revenues and earnings are surging.</li>\n <li>Revenues are reaching a multi-year high, with strengths in digital channels and limited time/celeb orders.</li>\n <li>Rollout of the MyMcDonald's Rewards should attract millions of more users and drive digital channel sales, a long-term growth opportunity.</li>\n <li>Labor and supply chain issues have had some impacts on operations, but margins have expanded still.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/95cfe39f14f810cca92bd298c0d36ae4\" tg-width=\"1536\" tg-height=\"1070\" width=\"100%\" height=\"auto\"><span>Jerritt Clark/Getty Images Entertainment</span></p>\n<p>A renowned dividend growth champion, McDonald's(NYSE:MCD)combines all of the right ingredients of an earnings and revenue rebound from pandemic-impacted operations, growing loyalty and digital channels, and recoveries in in-person dining, among other factors. Although supply chain and labor issues persist, the combination of positive earnings and revenue growth can drive McDonald's to new highs.</p>\n<p><b>A Strong Rebound</b></p>\n<p>2020 proved a challenging year for many businesses dependent on foot traffic, given that widespread restrictions and lockdowns limited customer activity in-person. Fast food chains suffered sharp declines in traffic, but not as sharp as entertainment venues, theaters, malls or hotels. Some of the top fast food/quick-service chains across different food categories (pizzas, burgers, drinks, etc.) and their change in foot traffic during 2020 is shown below.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/211bfacc1cdbe5728bdf6b67f5d96faa\" tg-width=\"958\" tg-height=\"592\" width=\"100%\" height=\"auto\"><span>Graphic from Yahoo</span></p>\n<p>Yum Brands' KFC, Pizza Hut, and Taco Bell(NYSE:YUM), Restaurant Brands International's Burger King and Popeyes(NYSE:QSR), Domino’s(NYSE:DPZ), Papa John’s(NASDAQ:PZZA), and Starbucks(NASDAQ:SBUX)all witnessed foot traffic decline over 50% in just two months, by April 2020; while McDonald's, Chipotle(NYSE:CMG)and Wendy's(NASDAQ:WEN)saw declines closer to 40%. McDonald's finished 2020 with the second smallest decline at about 45%, just behind Dunkin's 41% decline - however, these are still significant declines in foot traffic, which were offset by drive-thru and delivery.</p>\n<p>Even with >40% declines in traffic, McDonald's witnessed just a 23.9% decline in comp sales for Q2 2020, with that figure primarily driven by declines in the international segment. Now, comp sales have not just recovered off those declines, but grown above pre-pandemic levels in 2019.</p>\n<p>For Q2 2021, global comp sales showed 40.5% y/y - international drove a lot of the rebound, up 75.1%, while US rose 25.9%. Consolidated revenues were up 58% y/y as system sales rose 48%. These figures demonstrate the breadth of the recovery for the company compared to a severely impacted Q2 2020. McDonald's logged its highest quarterly revenue in over 10 quarters, with TTM revenue reaching a three-year high at $21.74 billion.</p>\n<p>A 2-year basis - comparing Q2 2021 to Q2 2019, prior to the pandemic - is where the true strength of that recovery is visible. Global comp sales are 6.9% higher than Q2 2019, with US comp sales showing a solid 14.9% increase and international just 2.6%. Comp sales strengths have been fueled by \"strong average check growth driven by larger order size and menu price increases...as well as growth in delivery and digital platforms.\" Even with the Delta variant surging and potentially impacting some in-person dining, McDonald's had 70% of dining rooms open, planning to be fully opened by Labor Day, paving the way for higher foot traffic aiding check and order size in comp sales growth.</p>\n<p><b>Earnings and Revenue Growth</b></p>\n<p>Although the pandemic still lingers as the case counts stemming from the Delta variant have spiked since the summer, McDonald's is charging forward with revenue and earnings growth. Q2 has put McDonald's on track to post its highest revenues since FY17 and its highest EPS figure.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/da164639956bc60c90f11ed1a9ff848f\" tg-width=\"584\" tg-height=\"349\" width=\"100%\" height=\"auto\"><span>Data from McDonald's</span></p>\n<p>For the first half of FY21, operating metrics not only have shown solid growth from 2020, but from 2019 and 2018 as well. Revenues are up 6.9% from 2019, while operating income is up 13.8% as margins expanded. Net income rose 32% from 2019's level, boosting diluted EPS substantially, up to $5.00 as shares outstanding decreased by almost 2.5%.</p>\n<p>As the fiscal year progresses and Q3 comes to a close, this growth is expected to continue; for the full year, revenues are expected to reach $23 billion, up nearly 20% y/y, with EPS projected to reach $9.1, up 50% y/y. Compared to 2019, revenues would be 9.1% higher and EPS 16.1%. Given the changes in the operating environment that have persisted, with dine-in not available in all locations, and with the rise of the Delta variant, this level of growth is impressive. Although this growth doesn't compare to a peer such as Wendy's, as revenues grew 12.9% in1H 21compared to 1H 19, and net income 66.6%, it's the scale that matters; Wendy's is a fraction of McDonald's, doing just $3.2 billion in system-wide sales during Q2 compared to McDonald's $28.2 billion.</p>\n<p><b>Some Catalysts and Challenges</b></p>\n<p>Aside from dine-in now being available in all locations (unless that has changed in the past two weeks), McDonald's has a few other key catalysts supporting its growth, including digital, delivery and a loyalty program. Last year's limited or no dine-in availability forced fast food restaurants to shift to those other service channels, drive-thru included.</p>\n<p>MyMcDonald's Rewards is the forefront of McDonald's digital strategy alongside its app, with the loyalty/rewards program rolling out in its largest markets. Going on its sixth year now, the app boasts over 150 million downloads (active users not disclosed), leaving McDonald's a massive user base to tap into with its rewards program. In the US, McDonald's reported over 22 million active users through Q2, with 12 million of those already joining the loyalty/rewards program. The company added that this was prior to advertising the program domestically, with additional rollouts in Germany and Canada this year, and the UK and Australia in 2022. Demand for the rewards program looks strong.</p>\n<p>Digital system-wide sales in the top six markets for McDonald's reached almost $8 billion in 1H 2021, up 70% y/y, and accounting for almost 30% of total system-wide sales for 1H. While loyalty rewards can drive higher engagement through the app, the true sign of long-term growth will stem from active users in the app and growth in loyalty signups. MyMcDonald's Rewards is still rolling out in large markets in Q4 and FY22, and early signup rates from the US show that demand for the program is there. Digital channels include delivery and self-service kiosks, and the upcoming quarters will shed light on whether digital sales continue to see momentum even as dining rooms reopen in full. Embedded the app with drive-thru and loyalty has created a synergy that has fueled digital growth, ahead of internal targets for digital customers.</p>\n<p>New product offerings and limited time collaborations also can spark traffic - the company is rolling out the McPlant, a pea-protein burger from Beyond Meat(NASDAQ:BYND), in more markets, while limited edition meals and orders including the Travis Scott, J Balvin and BTS orders and the Crispy Chicken Sandwich. Strong momentum and record breaking demand for the limited edition orders/items bodes well for future releases or orders.</p>\n<p>At the same time, McDonald's is battling supply chain and labor issues. Companies across all industries have had trouble finding, attracting and hiring workers, and McDonald's stores faced similar issues. McDonald's is seeing an increase in applications amid a 5% increase in US wages; labor inflation has been the majority driver of pricing, which is up about 6% this year, with food contributing just about 0.5%.</p>\n<p>Some margin pressures could surface in the back half of the year if average check moderates slightly from Q2's levels, but the broader top-line growth for the remainder of the year aided by these catalysts is expected to keep EPS growth strong. For FY21, McDonald's trades at about 26.6x projected diluted earnings of $9.10, about in line with historical levels, and about 24.2x FY22 earnings of $10.00, as strong margins and close to ~6% growth in revenue can drive ~10% growth in earnings y/y. FY23 could see similar growth rates, up to $10.90 in earnings on about 5.5% growth in revenues. A simple valuation at 26x FY23 earnings provides about 17% upside to $283 in one-year, and while there are other factors in play, the overall strengths within margin, loyalty program uptake, and digital sales acceleration/persistence support that growth and valuation.</p>\n<p><b>Overall</b></p>\n<p>McDonald's has rebounded quickly from 2020's harsh operating environment, even as headwinds to foot traffic have remained in place. Comp sales have not only shown strong growth off of 2020's levels, but solid single and low double-digit growth off of 2019, demonstrating just how strong this recovery has been. The digital channel has proven to be a large driver of system-wide sales, rising 70% to reach $8 billion in 1H; the rollout of the loyalty program in more top markets over the next four to six quarters can help drive digital engagement. While there are some challenges within inflationary pressures from labor and food, margins have expanded, and some slight moderation in margins amid top-line growth can drive revenues and earnings higher over the next couple years, and drive double-digit upside.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>McDonald's Growth In A Rebound Can Take It To New Highs</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMcDonald's Growth In A Rebound Can Take It To New Highs\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-09-20 10:27 GMT+8 <a href=https://seekingalpha.com/article/4456054-mcdonalds-growth-in-a-rebound-can-take-it-to-new-highs><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\n2020 proved to be a challenging year, and while some headwinds to foot traffic have remained, revenues and earnings are surging.\nRevenues are reaching a multi-year high, with strengths in ...</p>\n\n<a href=\"https://seekingalpha.com/article/4456054-mcdonalds-growth-in-a-rebound-can-take-it-to-new-highs\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MCD":"麦当劳"},"source_url":"https://seekingalpha.com/article/4456054-mcdonalds-growth-in-a-rebound-can-take-it-to-new-highs","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1103359237","content_text":"Summary\n\n2020 proved to be a challenging year, and while some headwinds to foot traffic have remained, revenues and earnings are surging.\nRevenues are reaching a multi-year high, with strengths in digital channels and limited time/celeb orders.\nRollout of the MyMcDonald's Rewards should attract millions of more users and drive digital channel sales, a long-term growth opportunity.\nLabor and supply chain issues have had some impacts on operations, but margins have expanded still.\n\nJerritt Clark/Getty Images Entertainment\nA renowned dividend growth champion, McDonald's(NYSE:MCD)combines all of the right ingredients of an earnings and revenue rebound from pandemic-impacted operations, growing loyalty and digital channels, and recoveries in in-person dining, among other factors. Although supply chain and labor issues persist, the combination of positive earnings and revenue growth can drive McDonald's to new highs.\nA Strong Rebound\n2020 proved a challenging year for many businesses dependent on foot traffic, given that widespread restrictions and lockdowns limited customer activity in-person. Fast food chains suffered sharp declines in traffic, but not as sharp as entertainment venues, theaters, malls or hotels. Some of the top fast food/quick-service chains across different food categories (pizzas, burgers, drinks, etc.) and their change in foot traffic during 2020 is shown below.\nGraphic from Yahoo\nYum Brands' KFC, Pizza Hut, and Taco Bell(NYSE:YUM), Restaurant Brands International's Burger King and Popeyes(NYSE:QSR), Domino’s(NYSE:DPZ), Papa John’s(NASDAQ:PZZA), and Starbucks(NASDAQ:SBUX)all witnessed foot traffic decline over 50% in just two months, by April 2020; while McDonald's, Chipotle(NYSE:CMG)and Wendy's(NASDAQ:WEN)saw declines closer to 40%. McDonald's finished 2020 with the second smallest decline at about 45%, just behind Dunkin's 41% decline - however, these are still significant declines in foot traffic, which were offset by drive-thru and delivery.\nEven with >40% declines in traffic, McDonald's witnessed just a 23.9% decline in comp sales for Q2 2020, with that figure primarily driven by declines in the international segment. Now, comp sales have not just recovered off those declines, but grown above pre-pandemic levels in 2019.\nFor Q2 2021, global comp sales showed 40.5% y/y - international drove a lot of the rebound, up 75.1%, while US rose 25.9%. Consolidated revenues were up 58% y/y as system sales rose 48%. These figures demonstrate the breadth of the recovery for the company compared to a severely impacted Q2 2020. McDonald's logged its highest quarterly revenue in over 10 quarters, with TTM revenue reaching a three-year high at $21.74 billion.\nA 2-year basis - comparing Q2 2021 to Q2 2019, prior to the pandemic - is where the true strength of that recovery is visible. Global comp sales are 6.9% higher than Q2 2019, with US comp sales showing a solid 14.9% increase and international just 2.6%. Comp sales strengths have been fueled by \"strong average check growth driven by larger order size and menu price increases...as well as growth in delivery and digital platforms.\" Even with the Delta variant surging and potentially impacting some in-person dining, McDonald's had 70% of dining rooms open, planning to be fully opened by Labor Day, paving the way for higher foot traffic aiding check and order size in comp sales growth.\nEarnings and Revenue Growth\nAlthough the pandemic still lingers as the case counts stemming from the Delta variant have spiked since the summer, McDonald's is charging forward with revenue and earnings growth. Q2 has put McDonald's on track to post its highest revenues since FY17 and its highest EPS figure.\nData from McDonald's\nFor the first half of FY21, operating metrics not only have shown solid growth from 2020, but from 2019 and 2018 as well. Revenues are up 6.9% from 2019, while operating income is up 13.8% as margins expanded. Net income rose 32% from 2019's level, boosting diluted EPS substantially, up to $5.00 as shares outstanding decreased by almost 2.5%.\nAs the fiscal year progresses and Q3 comes to a close, this growth is expected to continue; for the full year, revenues are expected to reach $23 billion, up nearly 20% y/y, with EPS projected to reach $9.1, up 50% y/y. Compared to 2019, revenues would be 9.1% higher and EPS 16.1%. Given the changes in the operating environment that have persisted, with dine-in not available in all locations, and with the rise of the Delta variant, this level of growth is impressive. Although this growth doesn't compare to a peer such as Wendy's, as revenues grew 12.9% in1H 21compared to 1H 19, and net income 66.6%, it's the scale that matters; Wendy's is a fraction of McDonald's, doing just $3.2 billion in system-wide sales during Q2 compared to McDonald's $28.2 billion.\nSome Catalysts and Challenges\nAside from dine-in now being available in all locations (unless that has changed in the past two weeks), McDonald's has a few other key catalysts supporting its growth, including digital, delivery and a loyalty program. Last year's limited or no dine-in availability forced fast food restaurants to shift to those other service channels, drive-thru included.\nMyMcDonald's Rewards is the forefront of McDonald's digital strategy alongside its app, with the loyalty/rewards program rolling out in its largest markets. Going on its sixth year now, the app boasts over 150 million downloads (active users not disclosed), leaving McDonald's a massive user base to tap into with its rewards program. In the US, McDonald's reported over 22 million active users through Q2, with 12 million of those already joining the loyalty/rewards program. The company added that this was prior to advertising the program domestically, with additional rollouts in Germany and Canada this year, and the UK and Australia in 2022. Demand for the rewards program looks strong.\nDigital system-wide sales in the top six markets for McDonald's reached almost $8 billion in 1H 2021, up 70% y/y, and accounting for almost 30% of total system-wide sales for 1H. While loyalty rewards can drive higher engagement through the app, the true sign of long-term growth will stem from active users in the app and growth in loyalty signups. MyMcDonald's Rewards is still rolling out in large markets in Q4 and FY22, and early signup rates from the US show that demand for the program is there. Digital channels include delivery and self-service kiosks, and the upcoming quarters will shed light on whether digital sales continue to see momentum even as dining rooms reopen in full. Embedded the app with drive-thru and loyalty has created a synergy that has fueled digital growth, ahead of internal targets for digital customers.\nNew product offerings and limited time collaborations also can spark traffic - the company is rolling out the McPlant, a pea-protein burger from Beyond Meat(NASDAQ:BYND), in more markets, while limited edition meals and orders including the Travis Scott, J Balvin and BTS orders and the Crispy Chicken Sandwich. Strong momentum and record breaking demand for the limited edition orders/items bodes well for future releases or orders.\nAt the same time, McDonald's is battling supply chain and labor issues. Companies across all industries have had trouble finding, attracting and hiring workers, and McDonald's stores faced similar issues. McDonald's is seeing an increase in applications amid a 5% increase in US wages; labor inflation has been the majority driver of pricing, which is up about 6% this year, with food contributing just about 0.5%.\nSome margin pressures could surface in the back half of the year if average check moderates slightly from Q2's levels, but the broader top-line growth for the remainder of the year aided by these catalysts is expected to keep EPS growth strong. For FY21, McDonald's trades at about 26.6x projected diluted earnings of $9.10, about in line with historical levels, and about 24.2x FY22 earnings of $10.00, as strong margins and close to ~6% growth in revenue can drive ~10% growth in earnings y/y. FY23 could see similar growth rates, up to $10.90 in earnings on about 5.5% growth in revenues. A simple valuation at 26x FY23 earnings provides about 17% upside to $283 in one-year, and while there are other factors in play, the overall strengths within margin, loyalty program uptake, and digital sales acceleration/persistence support that growth and valuation.\nOverall\nMcDonald's has rebounded quickly from 2020's harsh operating environment, even as headwinds to foot traffic have remained in place. Comp sales have not only shown strong growth off of 2020's levels, but solid single and low double-digit growth off of 2019, demonstrating just how strong this recovery has been. The digital channel has proven to be a large driver of system-wide sales, rising 70% to reach $8 billion in 1H; the rollout of the loyalty program in more top markets over the next four to six quarters can help drive digital engagement. While there are some challenges within inflationary pressures from labor and food, margins have expanded, and some slight moderation in margins amid top-line growth can drive revenues and earnings higher over the next couple years, and drive double-digit upside.","news_type":1},"isVote":1,"tweetType":1,"viewCount":106,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":5,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/860032696"}
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