McDonalds (MCD) has taken the globe by storm. The familiar golden arches can be spotted in 120 countries at 36,899 restaurants worldwide. The restaurant serves over 68 million customers each day. And ETFs with McDonalds exposure are reacting to a better than expected earnings report released Monday.
McDonalds Increases Prices
When Mickey D’s rose their prices, investors weren’t so sure what to expect. However, they were pleasantly surprised when higher prices on the McDonald’s menu led to surprisingly strong comparable-store sales, sending shares up in early trading Monday.
McDonald’s stock rose Monday after beating first-quarter forecasts across the board as U.S. sales got a boost from price hikes. Earnings per share of $1.67, up 14%, as revenue falls 13% to $4.915 billion. Same-store sales are expected to rise 3.8%.
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According to Fox Business, “McDonald’s earned $1.38 billion, or $1.72 per share, for the period ended March 31. A year earlier, the hamburger chain earned $1.21 billion, or $1.47 per share.”
Let’s take a look at how McDonalds ETFs are reacting as of 11 a.m. Eastern time.
ETFs with Exposure to McDonalds React to Earnings Report
- PowerShares Dynamic Leisure and Entertainment Consumer Discretionary Equities (PEJ) with a 4.90% weighting up 0.44%.
- PowerShares Dynamic Food and Beverage Consumer Staples Equities (PBJ) with a 4.85% weighting down 0.28%.
- SPDR Dow Jones Industrial Average ETF(DIA) with a 4.48% weighting up 0.64 %.
- Consumer Discretionary Select Sector SPDR Fund Consumer (XLY) with a 4.30% weighting up 0.67%.
- iShares Evolved U.S. Discretionary Spending ETF (IEDI) with a 4.05% weighting down 0.36%.
- iShares Evolved U.S. Consumer Staples ETF (IECS) with a 4.02% weighting unchanged.
- iShares US Consumer Services ETF (IYC) with a 3.67% weighting up 0.66%.
McDonalds Velocity Growth Plan
McDonalds has launched an All Day Breakfast plan, invested $6 billion through 2020 to digitally makeover the store locations, and increased prices on the menu to grow revenue.
According to Investors Business Daily, “EPS rose 22% to $1.79, the second straight quarter of accelerating profit growth. Revenue fell 9% to $5.14 billion as same-store sales climbed 5.5%. U.S. comps increased 2.9% driven by growth in average check resulting from menu price increases and product mix shifts. International comps grew 7.8%, High-Growth segment comps rose 4.7%, and Foundational markets comps increased 8.7%.”
“Guided by our Velocity Growth Plan, we are satisfying the rising expectations customers have for the taste and quality of our food and greater convenience as they visit our restaurants or enjoy meals delivered to their homes and offices,” CEO Steve Easterbrook said in a statement. “We are confident in the strategies guiding our business for today and for long-term sustained growth into the future.”
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