McDonald's posts smaller-than-expected fall in comparable sales

McDonald's 'signs of stabilization': Pro

McDonald's reported quarterly earnings and revenue that fell short of analysts' expectations but last month's sales showed improvement and topped the Street's estimates on Friday.

After the earnings announcement, the fast food giant's shares were higher in premarket trading but later wavered. (Get the latest quote here.)

A customer collects a tray of french fries, cold drinks and McFlurry deserts from the service counter inside a McDonald's Corp. fast food restaurant.
Andrey Rudakov | Bloomberg | Getty Images

The company's net income fell to $1.1 billion, or $1.13 per share, in the fourth quarter ended Dec. 31 from $1.40 billion, or $1.40 per share, a year earlier.

Revenue decreased to $6.57 billion from $7.09 billion a year ago.

Wall Street forecast McDonald's would report earnings of $1.22 a share on $6.68 billion in revenue, according to a consensus estimate from Thomson Reuters.

U.S. same-store sales were off 1.7 percent in the quarter but turned positive to a rise of 0.4 percent in December. This was better than the 0.8 percent drop analysts had expected.

Amid low investor expectations, Citi analyst Gregory R Badishkanian noted, "In our opinion, the better than expected December SSS more than offset the 4Q EPS miss—the quarterly print on the whole should therefore be viewed as a modest positive."

In the past year, McDonald's has battled lagging sales in the U.S., a China food safety scandal and macro headwinds in Europe.

The fast-food giant said comparable-store sales fell 0.9 percent in the fourth-quarter, and added that it expects same-store sales to be negative in January, as well. Analysts polled by Consensus Metrix estimated the chain would see a 1.5 percent drop in fourth-quarter same-store sales.

Reuters contributed to this report.