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McDonald's shares surge as strong restaurant sales show turnaround is taking hold

  • EPS: $1.47, versus $1.33 expected by Thompson Reuters estimates
  • Revenue: $5.68 billion, versus $5.53 billion expected by Thomson Reuters
  • Domestic same-store sales growth up 1.7 percent, versus expected decline of 0.8 percent

McDonald's share prices surged further into record territory Tuesday, thanks to a stronger-than-expected first quarter performance that got a boost from a new variety of Big Macs and discounted beverages.

  • EPS: $1.47, versus $1.33 expected by Thompson Reuters estimates
  • Revenue: $5.68 billion, versus $5.53 billion expected by Thomson Reuters
  • Domestic same-store sales growth up 1.7 percent, versus expected decline of 0.8 percent

The burger giant reported Tuesday earnings of $1.47 per share on $5.68 billion in revenue. The company was expected to post earnings of $1.33 per share on $5.53 billion in revenue, according to Thompson Reuters estimates.

Shares of the company rose more than 4.5 percent Tuesday, trading in record territory for a seventh-straight session.

"Our efforts to build a better McDonald's are yielding meaningful results with continued positive momentum and a strong start to 2017 that includes positive comparable sales across all segments, higher global guest counts and enhanced profitability," CEO Steve Easterbrook said in a statement. "There's a sense of urgency across the business as we take actions to retain existing customers, regain lapsed customers and convert casual customers to committed customers."

Despite having one less day in the quarter because of Leap Day last year, McDonald's was able to deliver global same-store sales growth of 4 percent and domestic same-store sales growth of 1.7 percent. Analysts were calling for overall same-store sales growth of 1 percent, and U.S. same-store sales to decline 0.8 percent, according to StreetAccount.

The company said it benefitted from changes to its menu and value and convenience initiatives, which it had set forth during an investor day in March. During the quarter, McDonald's rolled out three different sizes of its classic Big Mac, offered $1 soft drinks and $2 McCafe beverages and expanded its all-day breakfast offerings.

Investors had high expectations for the burger chain this quarter, particularly after the March announcement setting the framework for winning back the more than 500 million customers it lost since 2012.

"Guest traffic is beginning to strengthen in other markets such as the U.S. and Germany, though, their guest counts remain negative for the quarter," Kevin Ozan, McDonald's CFO, said during an earnings conference call Tuesday.

McDonald's reiterated that its focus will be on four pillars: menu innovation, store renovations, digital ordering and delivery in order to achieve sustained growth and attract more customers.