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January 28, 2013 at 08:00 AM EST
StockCall Analysis on McDonald's and Burger King: 2013 Outlook Looks Mixed

LONDON, January 28, 2013 /PRNewswire/ --

In the last few weeks, economic data out of U.S. and China has been encouraging. This augurs well for restaurant companies such as McDonald's Corp. (NYSE: MCD) and Burger King Worldwide Inc. (NYSE: BKW). However, McDonald's outlook suggests that the restaurant industry could see tough times ahead. StockCall professionals have finished the first round of technical analysis on these two restaurant stocks. Sign up now and download the free reports at

http://www.stockcall.com/research    

McDonald's Q4 Earnings Beat Expectations

Earlier this week, the world's largest restaurant chain reported better-than-expected earnings for the fourth quarter. The company reported fourth quarter profit of $1.4 billion, or $1.38 per share, compared to $1.38 billion, or $1.33 per share seen in the same period in the previous year. Our technical analysis report on McDonald's is accessible at

http://www.StockCall.com/MCD012813.pdf  

McDonald's revenue in the fourth quarter revenue rose 2% to $6.95 billion as sales in the U.S. rebounded. Comparable-store sales in the U.S. rose 0.3%. However, weakness in Europe and Japan weighed on the company's results. McDonald's global comparable sales rose only 0.1%, mainly due to weakness in Europe and Japan.

Outlook a Concern for Restaurant Industry

McDonald's gave a disappointing outlook last week due to global economic uncertainty. The company's weak outlook suggests that the restaurant industry is likely to face tough times ahead.

Don Thompson, CEO of McDonald's, said that economic volatility continues to hurt consumer sentiment and spending and more specifically growth in the informal eating-out industry has been relatively flat to declining around the world. Thompson added that the trend is expected to continue.

McDonald's said that its same-store sales in the month of January are expected to be negative.

With the world's largest restaurant chain expecting weakness, the prospects for the restaurant industry do not bode well for the near-term.

But Global Economy is Showing Signs of Improvement

The restaurant industry, however, can take heart from the fact that the global economy is showing signs of improvement. Recent economic data in the U.S., especially from the labor market, has been encouraging. Last week, the University of Michigan's consumer sentiment index fell unexpectedly. Apart from that though, the U.S. economy continues to show signs of recovery.

China is also seeing a rebound. Last week, a report from the National Bureau of Statistics showed that the Chinese economy grew 7.9% in the fourth quarter of 2012. Latest manufacturing data from the world's second largest economy has also been encouraging.

Europe and Japan are the weakest links for the global restaurant industry. However, Japanese officials have stepped up their efforts to boost economic growth in the country. The Bank of Japan this week unveiled additional monetary easing measures, which are expected to stimulate the Japanese economy. Meanwhile, in Europe, concerns over the region's debt crisis are continuing to ease.

Banking on New Products

Although the global economic environment is expected to continue to improve, restaurant industry could see weakness in the near-term. Companies such as McDonald's and Burger King Worldwide Inc. [Free Technical Analysis Report on BKW] (1), however, are rolling out new products to boost sales. Earlier this month, Burger King had announced the rollout of the all new Chicken Nuggets and six more limited-time menu items in restaurants across the U.S.

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  1. Burger King Worldwide Inc. Technical Analysis [ http://www.StockCall.com/BurgerKingWorldwideInc012813.pdf ]

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