MCD: The Bull and Bear Cases on McDonald’s

By Ryan D. Lavender Published on March 16, 2021 at 4:49 PM

In this report we examine the bull and bear cases regarding McDonald’s (MCD; Buy, $220.46). While we maintain our Buy rating on MCD — it continues to be our top large-cap restaurant-stock pick — it is good for investors interested in MCD to be aware of the bull and bear cases surrounding the stock, no matter what our rating on the shares is.

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Casual Dining Market Share Opportunities for Large Concepts

By Mark Kalinowski Published on December 8, 2020 at 12:00 AM

About six months ago, we published a report examining market-share opportunities within the casual dining sector. In this report, we update our numbers. One of the important changes is that we now look for 8%-20% of the casual dining restaurants in the U.S. that were in operation as of the start of 2020 to be closed permanently by the end of March 2021. (Previously, we were looking for 3%-15% of casual dining restaurants to be closed permanently by the end of December 2020.) Keep in mind that we expect these closures to be heavily weighted toward independents/momand-pops and, to a somewhat lesser degree, smaller (privately-held in nearly all cases) restaurant chains.

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PZZA Opportunities to Grow the U.S. Franchisee Base (and Refranchise)

By Mark Kalinowski Published on August 17, 2020 at 12:00 AM

Quick-service pizza sector same-store sales have performed the best of any sector in the U.S. restaurant industry the last few months. This likely means that some large franchise companies who seek opportunities within the restaurant industry may examine possibilities in the pizza sector. Carryout/delivery pizza plays very well in a world uncertain about how COVID-19 and related issues will impact the future. On top of that, not only has Papa John’s (PZZA; Buy, $96.15) put up great domestic same-store sales numbers the last few months — up by +30.3% for June 29-July 26, of example — it also seeks franchisees. In this report, we examine some possible franchised companies that are not currently in the pizza space, but could join in under the right circumstances. All in all, we believe that Papa John’s is poised to reward shareholders by (1) improving the quality of its franchisee base, and (2) at some point engaging in meaningful refranchising activity, which could lead to a higher valuation multiple for PZZA shares.

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