Shares of McDonald’s Soar Following Strong Earnings Beat

On Monday, McDonald’s reported earnings for the first quarter that were better than had been expected, as increases in menu prices fueled higher average transactions in the United States.

Although McDonald’s has lured customers in with its value deals, the bigger tickets prove that diners are not only looking for the cheaper eats.

Same-store sales on a global basis were strong as well, increasing by 5.5% and beating Wall Street that estimated an increase of 3.7%, as the customer counts arriving at the burger chain increased by 0.8%.

Shares of McDonald’s went up by as much as 5% on Monday which put them on pace for the company’s best day in more than one year.

In a prepared statement, CEO of McDonald’s Steve Easterbrook said the company continued to build upon the businesses broad-based momentum, marking 11 straight quarters of increases in comparable sales and a fifth straight quarter of increased customer counts.

McDonald’s adjusted earnings per share were $1.79 compared to an estimate of $1.67 a share. Revenue at the Golden Arches reached $5.14 billion versus an estimated figure of $4.98 billion.

Sales at same-stores, those locations opened for a minimum of one-year, increased by 2.9% in the U.S. which was in line with analyst estimates.

McDonald’s has deeply discounted its prices over the last couple of quarters offering $1 soft drinks, $2 beverages at McCafe and a promotion known as McPick 2 that allows customers to select two items from a long list of choices for just $5.

It launched its new dollar menu at the start of 2018, which contains several items that are priced at $1, $2 and $3 apiece.

Quarterly sales were boosted by customers choosing premium products, its Signature Recipe hamburgers, and more items ordered in each transaction, particularly from the new dollar menu.

In fact, those customers who ordered from the Dollar Menu purchased more than those people who ordered something else, said CFO Kevin Ozan.

Last quarter, red flags were raised by franchisees as they said they expected that the new Dollar Menu and other McDonald’s promotions would drive down the size of each check and reduce the ability they have to control prices on the menu.

However, analysts said those worries ended up being overblown. A lot of things they have been doing such as mobile ordering, delivery and other innovations are connecting well with customers said an analyst on Wall Street.

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