Friday, November 13, 2009

Intraday action (MCD)

Stocks up well today. The DJIA is +97points today. Weaker-than-expected consumer confidence data is not slowing stocks down today.

Leading the Dow is McDonald's (MCD), +2.5% after yesterday's investor day presentations. Goldman is out with positive comments on the firm, citing a healthy balance sheet that will enable them to invest in the business and take market share. McDonald's' own "Plan to Win" strategy involves opening 1,000 new restaurants and "re-imaging" 2,300. Goldman estimates the re-imaging could increase same-store-sales by 7% alone. McDonald's notes that their goal for incremental return on invested capital is in the high teens - a juicy number. As for what to do with excess cash, I like that it's a mix of buybacks and dividends, to please both sides of that argument:

"As we accelerate our better, not just bigger strategy to the next level, I'm confident we will continue to grow free cash flow in the future. We intend to return all of this cash to shareholders over the long term via dividends and share repurchases. Through October 2009, we have returned $4.3 billion to shareholders, bringing total cash returned to $15.8 billion under our existing three-year $15 billion to $17 billion target."

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