LOS ANGELES – McDonald's Corp. (MCD) on Wednesday posted preliminary third-quarter earnings above Wall Street expectations due to strong sales in Europe, premium chicken sandwiches and strong breakfast business.
Sales at established hamburger restaurants rose 3.9 percent in September, the world's largest fast-food company said, sending shares up about 1 percent in after-hours trade.
McDonald's said it expected third-quarter earnings of 58 cents per share, including a 2 cent gain from selling a stake in an unnamed foreign market in the September-ending quarter.
Analysts had predicted 55 cents, generally excluding the gain, according to Reuters Estimates.
"They're growing when a lot of other people are crying the blues," said restaurant consultant Hal Sieling, citing the performance of Wendy's International Inc. (WEN), which has been struggling to turn around sluggish sales. "(McDonald's) had the momentum and when you have that going and someone else takes a stumble, you'll do that much better."
Banc of America Securities analyst Andrew Barish said McDonald's beat his target, and he raised his 2005 and 2006 earnings estimates to $2.01 and $2.15 per share.
In the United States, McDonald's said, sales at established hamburger restaurants rose 2.7 percent in September and 3.7 percent in the quarter. In Europe, the so-called same-store sales (search) climbed 6.6 percent in September and 5.1 percent in the quarter.
In the United States the company cited stronger-than-expected sales of its premium chicken sandwiches, new hours at its restaurants and strong demand for its breakfast items.
McDonald's also said it had expanded menus in Europe and cited marketing efforts in Germany and the U.K. that were driving sales.
McDonald's shares trade at 15 times estimated fiscal 2006 earnings, compared with 18.6 for Wendy's and 15.2 for Carl's Jr. owner CKE Restaurants Inc. (CKR).