As I stated last week in my 3Q09 earnings preview (please see October 15 post titled “MCD – The Hamburglar Strikes” for more details), reported September sales trends should be the primary driver of the company's stock price performance.  That being said, I wanted to provide comparable sales ranges for each geographic segment as a benchmark of what I think would be GOOD, NEUTRAL, or BAD results based on 2-year average trends. 


For reference, I think September same-store sales growth could come in below expectations with the U.S. posting a +1% number (really BAD), which would point to continued deceleration in 2-year average monthly trends.  I am expecting September 2-year average trends in both Europe and APMEA to remain about even with August (NEUTRAL), which implies about 10% and 3.5% growth on a 1-year basis, respectively.


U.S. (facing an easy +2.8% comparison from last year):

GOOD: +3.3% or better would signal that the company is maintaining or improving its 2-year average trends on a sequential basis from August.  Although investors were not happy with the August number (stock traded down 2% that day), I don’t think people are expecting any improvement in September.


NEUTRAL: +2% to +3.2% would point to a slight deceleration in 2-year average trends but would not represent another month of significant deceleration like we saw in August when 2-year average trends declined 160 bps from the month prior.


BAD: below +2% would highlight a continued fall off in 2-year average trends in the U.S.  A reported 1% or worse would be really BAD as investors may have gotten over the shock of seeing these reported U.S. numbers in the 1.5%-1.8% range like we saw in June and August, but the company has not reported a number below +1.7% since March 2008 when comparable sales declined 0.8%.  A +1% number would imply a 120 bp sequential decline in 2-year average trends.




Europe (facing a relatively easy +5.0% comparison from last year):

GOOD: +11% or better would signal an acceleration in 2-year average trends.


NEUTRAL: +9% to +11% would point to 2-year average trends that are about even with what we saw in July and August.


BAD: below +9% would imply a slight slowdown in 2-year average trends and anything below 6% would be viewed as really BAD as it would signal a return in 2-year average trends to the low reported June levels.




APMEA (facing a relatively easy +5.9% comparison from last year):

GOOD: +5% or better would signal an acceleration in 2-year average trends.  A +8% or better would be really GOOD as it would imply a return to the 7%-plus 2-year average trend we saw earlier in the year.


NEUTRAL: +3% to +5% would point to 2-year average trends that are consistent with what we have seen in the last 3 months. 


BAD: below +3% would imply that 2-year average trends have slowed from recent levels and would represent a deceleration from June when the company posted its lowest 2-year average result since January 2007.




Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more