000915 McDonald's Stock Nears 2-Year Low After WarningSeptember 18, 2000
Chicago - Shares of McDonald's Corp. fell to their lowest level in nearly two years last week after the company said weak foreign currencies against a strong U.S. dollar may cut its full-year earnings per share by two cents more than it previously predicted.
McDonald's said foreign currency translation could hit full year 2000 earnings by as much as 7 cents a share, up from its previous forecast of 5 cents. Prior to that forecast, analysts polled by First Call/Thomson Financial had expected McDonald's to earn $1.52 a share in 2000.
Shares of McDonald's fell about five percent and were off $1-3/8 at $26- 15/16 immediately after the announcement.
Banc of America Securities also cut its investment rating on McDonald's to market performer from buy, citing currency pressures and the fast food giant's August sales data, which showed weak international results.
“Our change in opinion is largely centered around the international business, as we believe its prolonged weakness reflects the seemingly insurmountable macroeconomic challenges (such as currency pressure and rising oil prices),” Banc of America analyst Stacy Jamar wrote in a research note.
McDonald's, which operates 28,000 outlets, said Wednesday its overall sales in the United States rose four percent to $1.73 billion in August from a year earlier, while sales in Europe fell four percent to $828.6 million.
“August sales were (in our opinion) once again sluggish -- negative comparable sales everywhere except for the United States, which was slightly positive,” US Bancorp Piper Jaffray restaurant analyst Allan Hickok wrote in a research note. “We do not see a clear catalyst to get the stock moving near-term other than valuation.”