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Monday September 28, 2020



McDonald's Serves Tepid Earnings Report

McDonald’s Corporation (MCD) released its latest quarterly earnings on Tuesday, October 22. The world’s largest fast food chain’s revenue and profit disappointed investors, leading to a 4% drop in the company’s stock price immediately following the report.

The company reported quarterly revenue of $5.43 billion, up 1% from $5.37 billion of revenue reported at this time last year. Analysts expected revenue of $5.49 billion for the quarter.

“Our third quarter performance was strong, and broad-based momentum continued with our 17th consecutive quarter of global comparable sales growth,” said McDonald's President and CEO Steve Easterbrook. “Globally, our customers are rewarding our commitment of running better restaurants and executing our Velocity Growth Plan by visiting more often.”

McDonald’s reported net income of $1.61 billion for the quarter. This was down 2% from $1.64 billion in net income reported during the same quarter last year.

As the CEO Steve Easterbrook noted, McDonald’s continues to feature increased year-over-year comparable store sales. Globally, the company’s comparable sales increased 5.9%. This breaks down to a 5.6% increase for international operated restaurants, an 8.1% increase for international licensed restaurants and a 4.8% rise in comparable sales for the company’s domestic locations.

McDonald’s Corporation (MCD) shares ended the week at $1.94, down 7.2% for the week.

Six Flags’ Profits Tumble

Six Flags Entertainment Corporation (SIX) posted its latest quarterly earnings on Tuesday, October 22. The theme park operator reported a decline in net income despite increased revenue.

The company’s revenue for the quarter came in at $621.18 million. This was up from $619.82 million in revenue at this time last year.

“We were pleased to achieve record attendance and revenue for the first nine months of 2019, with solid growth across both our legacy and newly acquired parks,” said Six Flags President and CEO Jim Reid-Anderson. “As a team, we are laser focused on achieving our tenth consecutive record year by driving our strategic growth areas, including growing penetration of our membership programs to benefit from the enhanced loyalty and lifetime value of members.”

Six Flags’ net income for the quarter was $200.21 million, or $2.11 per share. This was down from $204.42 million in net income, or $2.16 per share at this time last year.

The company, which operates theme parks and water parks across the United States and internationally, announced on Thursday the appointment of Mike Spanos as its newest President and Chief Executive Officer. Spanos, previously the CEO of Pepsico’s AMENA division, will take over the role following the departure of current CEO Jim Reid-Anderson.

Six Flags Entertainment Corporation (SIX) shares ended the week at $43.16, down 16.1% for the week.

Tootsie Roll Industries Reports Earnings

Tootsie Roll Industries, Inc. (TR) released its latest earnings report on Wednesday, October 23. The candy company reported increased net sales and net earnings for the quarter.

The company posted net sales of $181.91 million during the third quarter. This was up slightly from $181.51 million at this time last year.

“Both third quarter and nine months 2019 net sales include increases in domestic sales of approximately 1%. Successful pre-Halloween marketing and sales programs contributed to this increase in 2019,” said Tootsie Roll Industries CEO Ellen R. Gordon. “Lower foreign sales, including the effects of foreign currency translation to U.S. dollars, adversely affected reported consolidated sales in both third quarter and nine months 2019 compared to the corresponding periods in 2018.”

Tootsie Roll Industries reported net earnings of $29.85 million for the quarter. This was an increase from $26.10 million during the same quarter last year.

The Chicago, Illinois-based company, maker of Blow Pops, Andes Mints, Junior Mints, Dubble Bubble and various Tootsie Roll branded candies, attributed its increased profits to capital improvements in its factories. These improvements, combined with recent price increases, allowed the company to reverse its declining profit margin.

Tootsie Roll Industries (TR) shares ended the week at $33.29, down 4.7%.

The Dow started the week at 26,853 and closed at 26,958 on 10/25. The S&P 500 started the week at 2,996 and closed at 3,023. The NASDAQ started the week at 8,137 and closed at 8,243.

Yields Rise as China Trade Deal Inches Closer to Completion

United States Treasury yields rose this week as the standoff between world superpowers appears to be reaching a resolution. Optimism that the U.S. and China will reach a deal that will ease the economic tension between the two countries has eased many investors’ fears of a global economic slowdown.

On Friday, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Vice Premier Liu He of China. Following the call, Trade Representative Lighthizer’s office reported that U.S. and China are nearing an initial agreement.

“They made headway on specific issues and the two sides are close to finalizing some sections of the agreement,” Lighthizer’s office said. “Discussions will go on continuously at the deputy level, and the principals will have another call in the near future.”

The benchmark 10-year Treasury note yield was at 1.809% during early trading on Friday after opening the week at 1.755%. The 30-year Treasury bond was at 2.291% early Friday following Monday’s opening yield of 2.238%.

The prospect of a resolution to the trade war follows President Trump’s agreement to forgo a previously-planned tariff hike scheduled for October 15. The hike would have increased tariffs from 25% to 30% on a variety of goods from China.

The 10-year Treasury note yield closed at 1.80% on 10/25 while the 30-year Treasury bond yield was 2.29%.

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, October 24. The report indicated an uptick in both the 15 and 30-year mortgage rates.

The 30-year fixed rate mortgage averaged 3.75% this week, up from last week’s average of 3.69%. Last year at this time, the 30-year fixed rate mortgage averaged 4.29%.

This week, the 15-year fixed rate mortgage averaged 3.18%, an increase from 3.15% last week. At this time last year, the 15-year fixed rate mortgage averaged 4.29%.

“The outlook for a favorable resolution to the trade dispute between the U.S. and China is still unclear, introducing some volatility into financial markets and the benchmark 10-year Treasury yield,” said Freddie Mac’s Chief Economist Sam Khater. “Mortgage rates are following suit but are at near historic lows, while mortgage applications to purchase a home remain higher year over year.”

Based on published national averages, the savings rate was 0.09% on 10/25. The one-year CD finished at 0.51%.

Published October 25, 2019
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