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McDonald's Hits an All-Time High as Steakhouse Chains Bleed Out
October 21, 2011 02:27 PM
SIGN O' THE TIMES
It's tough out there.
The Misery Index is at all-time highs, the European Union's looking at tossing a thirteen-figure sum at its debt crisis, and TV calendars are jammed end-to-end with shows about pawn shops.
But if you need one more sign o' the times, just look at the restaurant business.
), a member of Minyanville's
Occupy Wall Street Index
, is hitting all-time highs on the back of this morning's dynamite third-quarter earnings report.
The house that Ronald McDonald built delivered a profit of $1.45 a share, beating consensus estimates by 2 cents. Powered by a 5% same-store-sales gain, revenues came in at a better-than-expected $7.2 billion.
McDonald’s saw notable strength in Europe, where operating income grew 15%. Standard & Poor's may be considering dropping France’s credit rating by a couple notches, but the average consumer's still able to pony up a few euros for a Royale with Cheese.
So aside from its operational and logistical excellence, McDonald's is benefiting from the fact that it's an affordable place to get a bite to eat -- an important factor in its remarkable earnings consistency and 19% year-to-date stock price gain. And +19% is pretty darn good in a down year for the broader markets.
If you need additional comparison points, the
Powershares Dynamic Food and Beverage
) ETF is up just 1.2% year-to-date.
And just look at publicly traded purveyors of premium beef
Ruth's Hospitality Group
Morton's Restaurant Group
Ruth's, which you might know better as Ruth's Chris Steakhouse, is down 3% year-to-date.
Morton's? It's down over 27% on the year.
With disposable incomes under pressure, it makes complete sense that $6 Extra Value Meals are proving to be better business than Ruth's Chris’
$65 per person Steak & Seafood dinner
But McDonald’s isn’t the only discount-priced restaurant chain hauling in the dough for shareholders:
home of the $7.99 "Artisan" pizza
, is up a whopping 94% this year on a string of strong earnings reports.
Chipotle Mexican Group
) dropped a monster quarter after the close yesterday, and the stock’s hovering around the $330 level, giving shareholders a 55% year-to-date gain
Buffalo Wild Wings
) is also putting bulls in the black, reporting significantly better-than-expected Q3 numbers on Thursday. Its subsequent bounce has extended that stock’s year-to-date gain above 44%.
), operator of KFC, Taco Bell, and Pizza Hut, is up about 9% year-to-date.
So while consumers are feeling heat from the lousy job market, they’re still heading out in droves for reasonably priced or downright cheap meals.
No positions in stocks mentioned.
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