McDonald's Earnings Miss Weighs on the Dow
Now fully into earnings season, the Dow Jones Industrial Average is having a hard time getting things going today. The index has hung flat for most of the day as blue-chip stocks have remained mixed between risers and losers. McDonald's sure hasn't helped after the company's earnings report sent the fast-food giant's shares tumbling. Let's catch up on all the action around the Dow you need to know.
McDonald's struggles to satisfy the Street
McDonald's is dominating investors' attention today after the company's earnings release failed to impress Wall Street. The stock has dropped 2.4% so far, leading the Dow's contingent of losers downward. The company's earnings per share did pick up by about 5% year over year for the quarter, but it still fell $0.02 short of Wall Street's estimates.
More worryingly for McDonald's investors, same-store sales grew just 1% globally, falling across Europe, Asia, the Middle East, and Africa. The company has been dealing with same-store sales losses off and on since late last year, when it posted its first monthly same-store sales loss in years, but public perception concerning high obesity rates could continue hurting McDonald's sales in the future.
The company acknowledged this today, saying it expects sales this month to be flat and warning investors that it could be a tough year. McDonald's has tried to counter these trends by releasing healthier items in the U.S. and capitalizing on the improving standards of living in many international regions, but so far the strategy has failed to pay off in a meaningful way.
Disney's also on the downswing today, with the entertainment stock falling 1.3%. The company's pair of recently released movies -- the Western flick The Lone Ranger and family film Monsters University -- have split their fortunes at the box office: The former has failed to make even $150 million worldwide so far despite a reported budget of more than $200 million, while the latter has raked in more than $500 million over its box office run, picking up another $25 million this prior weekend.
Lone Ranger has turned into a flop for Disney, but this company can take much more damage at the box office than its rivals. Disney still controls the cash cows of the Marvel universe -- which it plans to tap for more films, including additions to its Avengers series -- and the Star Wars saga, which will likely be a hit once the first film under the Disney banner arrives in 2015. Given these assets and other properties like theme parks and sports media powerhouse ESPN, Disney controls a monstrous platoon of brands in its portfolio. If you're looking for a stock that can shrug off blows, it's hard to find many safer picks than Disney.
Intel's also among the losers today, with shares down 1.2%. The stock is struggling in the wake of its recent earnings release, which failed to live up to the Street's expectations as the PC market's continuing slump took a toll on sales. Intel seeks to continue pivoting toward non-PC markets, especially servers, in its search for growth. The company said today that it's developing low-power server chips in order to increase its foothold in the data center market.
Intel's long-term strategy has been questioned by many, particularly given the PC market's decline. It's a sign of caution for investors: After all, investing for the long run is the easiest way to build up financial strength in your portfolio. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
The article McDonald's Earnings Miss Weighs on the Dow originally appeared on Fool.com.Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Intel, McDonald's, and Walt Disney. The Motley Fool owns shares of Intel, McDonald's, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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