McDonald's shares opened in record territory Tuesday, thanks to a stronger-than-expected second-quarter performance that got a boost from upscale burgers and chicken sandwiches and discounted beverages.
- EPS: $1.70 vs. $1.62 expected, according to Thomson Reuters
- Revenue: $6.05 billion vs. $5.96 billion expected, according to Thomson Reuters
- U.S. same-store sales: 3.9 percent vs. 2.9 percent expected, according to StreetAccount
The Golden Arches reported earnings of $1.70 per share on $6.05 billion in revenue. The burger giant was expected to earn $1.62 per share on $5.96 billion in revenue, according to Thomson Reuters estimates.
"To us what this shows is that this is a business that had been in turnaround mode under new CEO Steve Easterbrook and we are starting to see some of these positive results now both domestically and internationally, which is very encouraging," Trip Miller, managing partner at Gullane Capital Partners and a McDonald's shareholder, told CNBC.
Shares of the company rose more than 4.4 percent on Tuesday, reaching a new high of $159.64.
"We're building a better McDonald's and more customers are noticing," CEO Steve Easterbrook said in a statement. "Our relentless commitment to running great restaurants and keeping the customer at the center of everything we do is generating broad-based strength and momentum across our entire business."
The company said that it excelled in the quarter due to its national cold beverage value promotion, which offers soft drinks for $1, and the launch of Signature Crafted sandwiches which are priced between $5 and $7 each. Diners are able to customize the Signature sandwiches with different toppings including pico guacamole, maple Dijon and sweet BBQ bacon.
Same-store sales grew 6.6 percent globally, and jumped 3.9 percent in the U.S. in the latest period.
Wall Street anticipated that the company would report same-store sales growth of 3.7 percent globally for the quarter, with same-store sales in the U.S. rising 2.9 percent, according to StreetAccount.
"A lot of people had really not given McDonald's a chance in the last five years, but this shows they are coming back and a lot of people are enjoying their experience," Miller said.
"We look for U.S. momentum to continue into Q3, with the first national line extension of Signature Crafted Recipes rolling out right now with Signature Sriracha," Mark Kalinowski, a Nomura-Instinet analyst, wrote in a research note Tuesday. "A Sriracha Mac dipping sauce will also be sold, which could help sales a bit of those World Famous Fries and Chicken McNuggets."
The company has also been testing several new McCafe beverages including hot and iced caramel macchiatos, French vanilla cappuccinos and Americanos in three cities in California.
In addition, McDonald's has been testing loaded bacon and cheese fries in locations in four states — Kentucky, Ohio, Pennsylvania and West Virginia. Although, success in these markets may not lead to a national rollout. Last year, the chain tested Gilroy garlic fries in California, and quickly sold out of the product. The garlic fries have yet to be launched nationwide.
The company said that it has been able to drive strong growth "by strengthening our existing menu while responding to the shifting tastes of our customers."
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.
The company also continues to work on renovating locations, and adding ordering kiosks and table service. Table service is coming to about 650 restaurants this year, bringing the chain's number of these stores to nearly 2,500.