Amid multiple headwinds, such as Russia’s invasion of Ukraine, interest rate increases to contain inflation, and lingering pandemic effects such as China’s lockdowns and disruptions in supply chains, the International Monetary Fund (IMF) has warned of a gloomier global economic outlook for 2023.
On top of it, JPMorgan Chase & Co. (JPM) economists expect the economy to contract by 0.5% by the fourth quarter of next year and possibly drag into 2024. The investment bank predicts a mild recession in the United States in the back half of next year, given expectations of further monetary tightening by the Fed in its battle against inflation.
On the bright side, the October consumer price index’s lower-than-expected increase is indicative that inflation is cooling. Federal Reserve Governor Christopher Waller said he’s open to reducing the level of interest rate increases soon, so long as the economic data cooperates.
McDonald’s Corporation (MCD)
MCD operates and franchises its restaurants in the United States and internationally. The company’s segments include the United States (U.S.), International Operated Markets (IOM), and International Developmental Licensed Markets & Corporate (IDL).
On September 14, 2022, MCD announced the establishment of a new facility, Speedee Labs, aimed at creating a new innovative environment creating more opportunities for collaboration and end-to-end development of restaurant solutions and technologies.
On October 13, MCD declared a quarterly cash dividend of $1.52 per share of common stock payable on December 15, 2022, representing an increase of 10% over the company’s previous quarterly dividend.
Its annual dividend of $6.08 yields 2.23% on the current share prices. The company’s dividend payouts have increased at a 6% CAGR over the past three years and an 8% CAGR over the past five years. Moreover, the company has a record of 20 years of consecutive dividend growth.
During the fiscal third quarter that ended September 30, 2022, MCD’s revenues from franchised restaurants increased 4.6% year-over-year to $3.67 billion. Its total operating costs and expenses decreased 3.3% year-over-year to $3.11 million, while the company reported its non-GAAP EPS to be $2.68.
Street expects MCD’s EPS to grow 9.1% year-over-year to $2.43 in the current fiscal quarter ending December 2022. It has surpassed EPS estimates in three of the four trailing quarters.
Over the past month, the stock has gained 12.1% to close the last trading session at $272.51. MCD’s 24-month beta is 0.66.
MCD’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MCD has an A grade for Quality and a B for Stability and Sentiment. Within the B-rated Restaurants industry, it is ranked #16 out of 45 stocks.
Click here to see the additional POWR Ratings for Growth, Value, and Momentum for MCD.
Biogen Inc. (BIIB)
BIIB is a biotech company that develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases.
On October 13, BIIB and GoodRx Holdings, Inc (GDRX) announced a collaboration to improve the patient and healthcare provider experience when initiating a new specialty therapy.
Bansi Nagji, President of Healthcare at GoodRx, said, “We are proud to work with medical professionals to help patients with relapsing MS get the therapy they need more efficiently. This exciting integration with Biogen is just the start of the great work to come as we expand our offerings for providers.”
During the fiscal third quarter ended September 30, 2022, BIIB’s total revenue came in at $2.51 billion. Its net cash provided by investing activities grew 815.8% year-over-year to $1.67 million. The company’s net income increased 256.8% from the year-ago value to $1.13 billion, while its EPS grew 253.2% from the prior-year quarter to $7.84.
BIIB’s EPS is expected to grow 10.4% in the fiscal first quarter ending March 2023 to $4.00. Additionally, the stock has surpassed its consensus EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 51.2% over the past six months to close the last trading session at 300.01. It has a 24-month beta of 0.33.
It is no surprise that BIIB has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Value, Sentiment, and Quality. It is ranked #5 out of the 380 stocks in the Biotech industry.
To see additional POWR Ratings for Growth, Momentum, and Stability for BIIB, click here.
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MCD shares were trading at $272.40 per share on Thursday morning, down $0.11 (-0.04%). Year-to-date, MCD has gained 3.31%, versus a -16.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
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