Slow down, fast-food investors: Mickey D's shares still might get cheaper.
A version of this article originally appeared on our US site, Fool.com.
WASHINGTON, DC -- In January, McDonald's (NYSE: MCD.US) shares hit a 52-week high of $102.22. What a difference six months makes.
The fast-food giant's shares have cooled considerably; in May, waiting for a better price on Mickey D's stock seemed like the smartest idea, given some uncertainties. First and foremost, CEO Jim Skinner will retire this summer, leaving his successor Don Thompson with an extremely tough act to follow.
Furthermore, McDonald's same-store sales growth in May left a lot to be desired. Worldwide comps growth rose 3.3%, disappointing analysts' expectations. Worse, growth in McDonald's Asia, Middle East and Africa segment decreased 1.7%. Such a disappointment is significant, because Asian market sales potential is highly coveted by investors. The current situation in Europe is a worrisome component for many companies as well, including McDonald's.
The spectre of slower growth in Asian markets, particularly China, has also had a negative impact on shares of fast-food rival Yum! Brands (NYSE: YUM.US), which has long showed impressive success with Chinese expansion.
Hardcore bargain-hunters would probably also consider McDonald's a shares far more reasonably priced than, say, Chipotle (NYSE: CMG.US). McDonald's trades at 14 times forward earnings, whereas Chipotle's forward price-to-earnings ratio is 36.
McDonald's has been a stellar stock to own. It's a solid company for the long term, and its price today is certainly a much better bargain than it was in January. Then again, McDonald's tough operational comparisons with past stellar years, the macroeconomic uncertainty, and Skinner's approaching retirement all add a little extra risk right now. Potential Mickey D's investors may still get a better deal on the shares if they wait patiently through the coming months.
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