McDonald’s Corporation (MCD) Not Cheap But Digestible

This means one of two things: either the competition is taking a toll or the economic slowdown abroad has gotten worse. Plus, it could be a combination factor that has caused the reduction in foot traffic. While there’s no evidence to suggest that Burger King or Wendy’s is causing damage to McDonald’s Corporation (NYSE:MCD), it’s hard to ignore the impressive performance of Yum! Brands, Inc. (NYSE: YUM), which outgrew McDonald’s across the global systems by almost 2% (3.1% vs. 5%).

This may very well change in the coming quarters, however. Yum! is working to repair its reputation after a recent PR nightmare, where two of its suppliers were reported to have used excessive levels of antibiotics in chickens. While Yum! has done a good job of facing the issue, investors won’t know the extent of the damage until the company reports earnings for at least a couple of quarters. In the meantime, this may have opened the door for McDonald’s to steal some market share.

Not on the value menu yet but tasty
McDonald’s Corporation (NYSE:MCD) understands the nature of tis business and it is an expert at enticipating what consumers will want. To that end, the company’s emphasis on value and its unique promotional food events will continue to drive traffic.

In the meantime, recent attention to menu items is the first step toward returning value to shareholders. I’m going to miss the Chicken Selects, but investors should be rewarded with improved margins and a stronger balance sheet going forward. The stock is not cheap, but there’s still tremendous value to come.

After making investors rich in 2011, McDonald’s has been one of the worst-performing blue-chip stocks of 2012. Our top analyst on the company will tell you whether you should be worried by this trend, and he’ll shed light on whether McDonald’s is a buy at today’s prices. Click here now to read our premium research report on the company.

The article McDonald’s Not Cheap But Digestible originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide, Chipotle Mexican Grill (NYSE:CMG), and McDonald’s. It owns shares of Chipotle Mexican Grill and McDonald’s.

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