McDonald’s Corporation today announced results for the second quarter ended June 30, 2020. McDonald’s reports Q2 EPS of 66c versus the consensus estimate of 74c. The company reported Q2 revenue of $3.76B versus the consensus estimate of $3.68B. McDonald’s reports Q2 global SSS (same store sales) down 23.9%. McDonald’s says 96% of total restaurants operating as of June 30th. In U.S., the company says “substantially all restaurants were operating drive-thru, delivery, and/or take-away with a limited menu. Limited hours also applied”, with about 2,000 restaurant dining rooms reopened with reduced seating capacity. Internationallly, “substantially all restaurants in China and Japan were operating with reduced seating capacity for dine-in. Latin America was the geography with the most restaurants closed.”

CEO Chris Kempczinski says: “Throughout our history, McDonald’s has demonstrated the strategic foresight necessary to position our business for the future. Our strong drive-thru presence and the investments we’ve made in delivery and digital over the past few years have served us well through these uncertain times. We saw continued improvement in our results throughout the second quarter as markets reopened around the world. I’m especially proud of the way the McDonald’s System continues to provide a safe environment for both customers and crew, building on our 65 year legacy as a responsible and reliable choice for safe food. We’re confident that the strong foundation we’ve built, combined with the unique advantages of our System, position us well to continue operating successfully during this pandemic and emerge even stronger.”

Stephens analyst James Rutherford said historical evidence supports the view that people don’t stop eating out in tough times, they mostly trade down when their finances are pressured. Given his concerns about unemployment benefits being set to decrease, PPP funds dwindling, and loan forbearance programs expiring, Ruterford sees quick service and pizza being set to widen their performance gap compared to full-service dining, he tells investors. Given his expectation that “trouble is brewing for the consumer,” Rutherford highlights McDonald’s (MCD), Wendy’s (WEN), Carrols Restaurant (TAST), Domino’s Pizza (DPZ) and Papa John’s (PZZA) as names to own in the current environment. Outside fast food and pizza, he he thinks Chipotle (CMG) and Texas Roadhouse (TXRH) should fare better than peers and “offer a very compelling value proposition,” the analyst added. He has Overweight ratings on all of the stocks mentioned aside from Chipotle, which he rates at Equal Weight.

Gregory Branch, partner at 1874Financial, and Mike Santoli, CNBC’s senior markets commentator, join “Squawk Box” to discuss what investors should watch out of earnings this week.


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