We are adding MCD to the Hedgeye Best Ideas list as a LONG. As I said last week, 2015 will be the last time MCD will trade below $100 on an average price basis!
We will be hosting a McDonald’s Blackbook call on Wednesday, July 8th at 11am ET.
After nearly four years of being bearish on MCD, it’s now time to reverse course. We are confident that MCD is not a structurally broken company. Importantly, there are a number of initiatives in place that will ultimately reverse the fortunes of the company.
Yes, fixing McDonald’s operationally will take time, but the seeds have been planted. From the work I have done, by 2016 it will be clear that MCD is well on its way to reasserting itself as the dominate company that it is.
McDonald’s CEO, Steve Easterbrook, is reshaping the company from the inside out and the financial impact of these actions are about to be clear. Returning MCD to sustainable growth is centered on structural changes to the operating model and a recommitment to regaining the trust and loyalty of customers.
These changes are taking place in Oak Brook and at the local level. Within McDonald’s local management and franchisees working together to improve the McDonald’s experience. The new experience is consistent with what made the company great in the first place.
While financial engineering is part of the new foundation, its limitations are obvious so understanding how an operationally led turnaround will unfold is critical to make a longer-term commitment to being LONG MCD.
The LONG MCD BLACKBOOK will focus on:
- How the new operating structure of the company is breathing new ENERGY into the company including improved profitability
- The primary cause for the market share losses in the USA over the past three years and how the company is fixing it
- The timeline for the turn in sentiment and performance
- Updated financials
Call details and materials to be provided next week.