McDonald's super sized profits

McDonald's reported before the bell. These were also exceptional numbers, and luckily for us, they were also the full year numbers. Why I say luckily is that we can get simple valuations without wondering about what they might or might not make for the next two quarters. If you want to download the .pdf for the full year numbers, go to their investor relations segment of their website and you will see it staring at you. Here are some of the highlights:

"Consolidated revenues up 12% (8% in constant currencies) to a record-high of $27 billion. Combined operating margin increase of 60 basis points to 31.6%. Diluted earnings per share of $5.27, up 15% (11% in constant currencies). Returned $6.0 billion to shareholders through share repurchases and dividends."

Nice. Just for the record, McDonald's as a company has increased their annual dividend every year since they started paying one back in 1976. Amazing, so this year will be the 36th consecutive year. In fact it goes further than this, the company roughly has a three percent dividend yield, and continues to buy back around two percent of outstanding shares in issue, hereby enhancing future returns to you, the shareholder. And by no means is the growth story overdone, the company continues to expand their geographical presence across the globe, the US business was encouragingly better than anticipated. And as some commentary points out too, Europe is just fine, GDP contractions pending notwithstanding, people continue to dine at their restaurants. Same store sales accelerated at the fastest rate since 2004. Good value for money, even though it is not everyone's cup of tea, what-what! Obviously the well documented food inflation is a risk to their business, but that is something that every person (other than subsistence farmers) has to deal with on a daily basis.

Sometimes you have to pay up for the quality of the company, McDonalds is one of those companies that looks expensive, but for a reason. They continue to deliver. If you want to buy some more of the stock, or you simply want to own it, do so quickly, yesterday the stock sold off. Down two and a bit percent to 98.75 Dollars a share in normal trade yesterday. At current levels the stock trades on 19.35 times historical earnings. After hours some folks must have seen the analyst notes, because the stock is up around half a percent. The annual dividend at the new quarterly div rate is around 2.80. Expectations are for double digit earnings growth. A quality company, the stock has rewarded shareholders, and should continue to do so. We continue to buy the stock.