A fter four straight quarters of falling profits, will investors be lovin’ it ifMcDonald’s ( MCD ) gets an earnings boost in the third quarter? New CEO Steve Easterbrook is moving quickly to cut costs and revamp the burger giant’s menu amid growing competition from fast-casual chains likeChipotle Mexican Grill ( CMG ) whose menus are considered healthier.
Profit for Q3 is expected to rise 17% to $1.28 a share, ending a four-quarter slide. Sales are seen as slipping 8% to $6.43 billion, though that would mark the second straight quarter of improvement.
Earnings for the full year are forecast to slide 3% to $4.69 a share before rebounding to a 10% gain in 2016.
Despite its troubles, McDonald’s stock has risen about 6% this year, ahead of the S&P 500. It’s near a 52-week high as it works on a consolidation with resistance at about 101.
Meanwhile, McDonald’s says it has raised its dividend every year since 1976. The latest increase was announced last September, when the company boosted its quarterly payout by 4 cents, or 5%, to 85 cents a share.
The annualized yield is 3.4% at the current share price, well above the S&P 500 average of 2%.
McDonald’s restructuring plans reportedly include closing more restaurants than it opens in the U.S. to cut costs. About a third of the company’s sales come from the U.S. The rest come from abroad, mainly Europe.
McDonald’s is also reportedly making changes to its menu in a bid to stem declining same-store sales. The changes include increasing the size of its quarter-pounder beef patties and grilling hamburgers in a way that makes them more juicy.
“We’re recommitting to tastier food across the menu,” Easterbrook said at a conference in May, according to Bloomberg.
The 5-year Earnings Stability Factor is solid at 5. Pretax margin fell in 2014 to a still-strong 26.9%.