SOURCE: Five Star Equities

Five Star Equities

July 26, 2012 08:20 ET

Chipotle Mexican Grill and McDonald's Shares Fall as Earnings Fail to Impress Investors

Five Star Equities Provides Stock Research on Chipotle Mexican Grill and McDonald's

NEW YORK, NY--(Marketwire - Jul 26, 2012) - The current global economic slowdown has begun to take its toll on the Restaurants Industry. Chipotle Mexican Grill, McDonald's, and Yum! Brands all saw their shares fall after posting earnings that failed to impress investors. Chipotle shares dropped over 20 percent as the company posted its slowest sales growth since 2010. Five Star Equities examines the outlook for companies in the Restaurants Industry and provides equity research on Chipotle Mexican Grill, Inc. (NYSE: CMG) and McDonald's Corporation (NYSE: MCD).

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A sluggish global economy seems to have cooled down sales of companies in the Restaurant Industry. Recent data has shown that retail sales in the U.S. have fallen for three consecutive months, China's growth is as its slowest pace in years, and Europe's debt crisis continues to expand. Moody's Investor Services earlier this week slashed the credit ratings of Germany, the Netherlands and Luxembourg to "negative" from "stable."

"McDonald's global comparable sales remained solid for the quarter while overall results reflected the slowing global economy, persistent economic head winds and the investments we've made to enhance restaurant operations," CEO Don Thompson said in a statement.

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Chipotle Mexican Grill reported same-store sales slowed to just an 8 percent increase during the second quarter. "We're seeing a slowdown. I mean, there is no other way around it," said Chief Financial Officer Jack Hartung on a conference call. "It's not a significant slowdown, but it is a slowdown." During the quarter the company opened 55 new restaurants, including their first restaurant in Paris, France, bringing the total restaurant count to 1,316.

McDonald's has approximately 33,000 locations around the world. The company reported total revenue for the second quarter was $6.92 billion, a slight increase from the $6.91 billion in the year ago quarter. McDonald's reported that for the second quarter they earned $1.35 billion, or $1.32 per share, compared to $1.4 billion, or $1.35 per share, in the year ago quarter. Shares of the company are down over 12 percent this year.

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