McDonald’s Corporation (MCD): Why I Like It

For instance, Chipotle Mexican Grill, Inc. (NYSE:CMG)’s healthier fast food is very popular with the younger crowd and the company is riding high on the demand for its products. Unsurprisingly, the fast food chain, known for its great tasting burritos, has been doing great for the past few quarters. The Mexican grill chain has been reporting gains in revenue and income while its shares have been climbing higher. The company also reported its last quarter results this week. Not surprisingly, it gained 13.4% in revenues from the previous year, with a 1% increase in comparable sales. Its diluted earnings were a massive 24.4% up at $2.45 per share.

Lately, McDonald’s Corporation (NYSE:MCD) has been making some progress in the right direction. For example, when McDonald’s launched the McWrap, many touted it as a “Subway buster”, since it uses fresh vegetables and a variety of sauces, not unlike a Subway sandwich. And McDonald’s Corporation (NYSE:MCD) did gain in terms of revenues. The company just needs to keep on doing so, by launching new (and healthier) products and finding innovative ways to sell them. Remodeling of its stores and opening of new stores will also help.

If it can manage to pull back the younger crowd, it’ll have little cause for worry.

Why I like it

One of the reasons why I like McDonald’s is that it has a policy of returning a large proportion of its cash flow to investors. It is one of those solid, low-risk companies you can rely on. In the last quarter, the company returned $1.1 billion to its investors via share buybacks and dividends. Currently, McDonald’s Corporation (NYSE:MCD) has a dividend yield of 3.10%.

Further, the share is trading at a relatively low P/E of 18.60. The industry P/E is 21.40 while Chipotle Mexican Grill, Inc. (NYSE:CMG)’s is an astounding 41.90. At the current rate, this makes McDonald’s a cheap buy.

The article Watch Out For This Fast Food Company! originally appeared on Fool.com and is written by Sonam Chamaria.

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