If you’ve got money tied up in McDonald’s, you’d be wise to sell it and invest elsewhere. Sales at the $100 billion global hamburger chain are slowing. Hedgeye Restaurants analyst Howard Penney expects it to underperform for much of 2017.
Just last week, McDonald’s (MCD) reported fourth quarter same store sales for McDonald’s US, down -1.3%, that missed Wall Street’s expectations. The slowdown wasn’t even on most Wall Street analysts’ radar, but Penney saw it coming.
Five months ago, Penney closed out his bullish call on the stock and moved to neutral. That was quite a flip for Penney, who laid out the bull case in 2015. Back then shares of McDonald’s were trading in the mid-90s and he argued that “2015 will be the last time this stock is below $100.” Shares now trade above $120.
Wall Street consensus missed the upside in McDonald’s sales turnaround then, and is now largely blind to the downside today.
“I’m going to say that the consensus estimates are too aggressive for McDonald’s US, so that’s why the stock underperforms for some time,” Penney says.
Cashing out on McDonald’s and looking for some juicier long or short stock calls? Click here to check out Penney’s Sector Spotlight presentation where he discusses some of his best ideas like U.S. Foods (USFD), Whole Foods Market (WFM), Costco Wholesale Corp (COST) and more.
