Analyst Note| Sean Dunlop |
After digesting wide-moat McDonald's first-quarter results, we maintain our fair value estimate of $231 and view the shares as fairly valued. A slightly quicker recovery than anticipated in the U.S. (with comparable-store sales up 13%) led us to modestly increase our EPS estimate (up $0.02 to $8.29), offset by higher stock-based compensation. After stripping out the impact of a gain on the sale of some of the firm's Japanese units, McDonald's EPS came in $0.11 higher than FactSet consensus, with a reported $1.92 representing 30% growth from a year ago. The firm's U.S. market, boosted by stimulus spending and February's chicken sandwich launch, healthily exceeded 2019 levels on a two-year stacked basis (up 13.1%), though the international operated markets division continued to see pressure. A heavy skew toward Western Europe capped same-store sales growth at 0.6% for the segment, down a third from 2019 as virus outbreaks and dine-in restrictions impeded guest traffic.