McDonald's with a sizeable beat

McDonald's reported quarterly numbers on Friday, it was always going to be one of those very busy days, numbers being thrown at you thick and fast. A truly global brand like GE, but perhaps more recognisable, because of the aim of being in every neighbourhood, and let us face it, DO NOT tell me you have not used the outlets (restaurants) as a landmark. Because you have.

Right into the meat of it, so to speak. I never know how to do this, to report the numbers all in Dollars or to report in constant currencies. We never do that for a lot of our businesses that we chat about here (well, not often), so for the purposes of this exercise, let us do it all in Dollars. Because they are American. Right, now that we made a hash (brown) of that, proceed.

Revenues increased by 16 percent to 6.9 billion Dollars when compared to the same quarter last year. Net income of 1.41 billion Dollars, this is a very profitable business. That translates to 135 US cents per share of earnings. 61 cents per share dividends declared. So expect 241 cents this year. Stock price was up 2.33 percent Friday and closed at 88.56 Dollars. So, the trailing PE is less than 18 times (just a bit) and the dividend yield is 2.85 percent. So you could buy and hold this for two years, or you could buy a two year note issued by the US Treasury and the yield on that is 0.39 percent. But both are American favourites.

We continue to buy the stock, we are comfortable at these levels. The few reports that I have seen so far expects around 6 USD of earnings in 2012. And ten percent or more the year after. So forward less than 18 months the company is trading on less than 15 times earnings. Roughly the dividend cover is two and a quarter. Seventy cents or so would probably be too much to expect in 2012. That is around three percent. Sounds much better than most cash rates in the developed world.