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Cramer highlights the value of McDonald's: The current pullback is a 'gift'

  • "Mad Money" host Jim Cramer reiterates his bullish call on shares of McDonald's.
  • As McDonald's stock sinks, Cramer argues that the chain, led by CEO Steve Easterbrook, has a lot going for it.

When CNBC's Jim Cramer saw that the stock of McDonald's was down nearly 11 percent from its January highs, he wondered if he had to reevaluate his bullish stance on the fast food chain.

"While the stock has been bouncing in recent weeks, the pullback was severe enough that I think it's worth reassessing this story to make sure McDonald's is still worth owning in this new, more risky environment," the "Mad Money" host said on Wednesday.

"The answer? Not only is McDonald's stock getting attractive, I think you're being given a pretty good entry point here," Cramer said.

Cramer has long been a fan of McDonald's CEO Steve Easterbrook, who took on the role in 2015. Since then, Easterbrook has revamped the chain's menu, introduced all-day breakfast and fueled a 60 percent gain in shares of McDonald's.

Better yet, Easterbrook has helped reduce the company's operational costs and turn same-store sales, a key metric for retailers and restaurant chains, from negative to not only positive, but competitive versus other publicly-traded restaurant chains.

On top of McDonald's double-digit earnings growth, Easterbrook has also rewarded shareholders by shrinking the company's shares by 17 percent through a series of buybacks.

"Holy cow, it's like he's trying to take McDonald's private," Cramer quipped.

The "Mad Money" host argued that one of Easterbrook's savviest moves was fostering connections with McDonald's franchisees, who run the majority of its 36,000-plus restaurants.

"That's made it much easier for him to roll out all of these new initiatives: digital kiosks, ... a new mobile app with 20 million users in the U.S. alone — about time — and even delivery, now available at 10,000 locations around the world," Cramer said.

But even with all the positives, sellers still managed to put pressure on McDonald's stock in the wake of the company's fourth-quarter earnings report.

With the market already in decline, McDonald's earnings beat wasn't enough to sway the bears, especially after Chief Financial Officer Kevin Ozan said on the conference call that he expected 2018 to be "choppy" due to the tax overhaul and new accounting standards.

Being a global operator, McDonald's didn't benefit from the Trump administration's corporate tax cuts as much as some had hoped, maintaining a relatively high U.S. tax rate and still paying taxes in other countries.

McDonald's executives also said they would use its $6 billion in savings from the tax cuts to invest in the business — bad news for investors who were hoping for more buybacks or higher dividends.

All that combined to push McDonald's shares lower, a downtrend made worse by the early February sell-off and a negative analyst report criticizing its value-focused menu.

"My view? The fundamental story with McDonald's is still intact," Cramer said. "McDonald's has a lot going for it, and if they give us more quarters like that last one, I think the stock switches direction, pivots and goes higher."

"The bottom line: this pullback in the stock of McDonald's is totally overblown," he concluded. "The only real piece of news here, that the company's going to invest its tax savings in growth initiatives, is good news, not bad news. As far as I'm concerned, the current discount is a gift and the only thing that happened is that its stock got too hot too fast, and that's now been taken care of by the sell-off."

WATCH: Cramer pushes back on the McDonald's bears

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