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McDonald & # 39; s
the stock fell 3% Monday after the board fired CEO Steve Easterbrook for a "consensus relationship" with a subordinate. The acquisition put the shares at $ 188, or 24 times the year's projected earnings, which was not an obvious buy option even with the S&P 500 index trading 19 times.
McDonald's under Easterbrook defied expectations. The stock returned 18% a year compounded over the past five years, versus 11% for the S&P 500. Improvements continue. The wait time for US transit customers has fallen by an average of 20 seconds over the past year, and customer satisfaction results recently reached a high level. The "Experience of the Future" drawing, which includes self-order kiosks, dynamic menu boards and delivery, has reached 9,000 out of 14,000 American restaurants.
New CEO Chris Kempczinski, 51, who led the US business, says he will continue to do what works. But sales growth in the same store is declining, revenue estimates are lowering, and
Wendys
in September said it will return for breakfast, bringing McDonald's stock down 3%. When McDonald's missed sales and earnings estimates per share in the third quarter, the stock lost 5%.
"Changes of this magnitude are disruptive and tend not to occur in isolation," wrote Piper Jaffray's Nicole Miller Regan, who downgraded stock to Neutral from Overweight and cut its price target to $ 195 from $ 224. The stock comes with a dividend yield of 2.7%, and Wall Street sees EPS in 2020 growing 8%, down from below 1% for 2019. That's enough to be similar, but save the lovin 'for a lower price. [19659006] Last week
Trade Winds
The indices set new highs as trade optimism rose, especially after China said it was a mutual agreement to reset tariffs if a Phase 1 trade agreement could be achieved – just to have the White House, in a multitude of mixed messages, so doubt it. For the week, Dow industrials rose 1.2% to 27,681.24; The S&P 500 was up 0.9% to 3093.08; and Nasdaq Composite advanced 1.1%, to 8475.31.
Immeachment Rolls On
Four White House officials refused to testify before Congress, including National Security Council chief John Eisenberg, who led the effort to place a printout of the July 25 conversation with President Trump and Ukrainian President Zelensky on a secret server. The House Intelligence Committee began to release depositions in Ukraine, asking US Ambassador to the European Union Gordon Sondland to change his testimony and admit it was a quid pro quo. Meanwhile, a federal court rejected Trump's attempt to keep his Manhattan attorney's tax, and a New York State judge ordered him to pay $ 2 million for abuse of his foundation.
Sale of Aramco
Saudi Arabia's state oil company, Aramco, started the process of selling 2% to 5% of the share to the public. The prospectus will be issued on November 10, and trading on the small, relatively illiquid Riyadh exchange, Tadawul, could begin in December. Saudi Arabia is reportedly pushing for production cuts ahead of the IPO to increase oil prices, in danger of helping US shale oil producers.
India ends trade block
India withdrew from Asia's regional comprehensive economic partnership, or RCEP, a trade group organized by China as a counterweight to the Trans-Pacific Partnership. India has the highest tariff rates in all countries in the group. China said that India can join again at any time.
Social Media Under Siege
Federal Attorneys Charged Two Former Employees in
Twitter
by spying for Saudi Arabia by sending dissident information to the regime. Individually, the US Attorney General went to court to demand information from
Facebook
in a privacy probe. And thousands of Facebook documents were released that could be fodder for US and European antitrust investigations.
Annals of Deal Making
Medical device manufacturer Stryker announced the acquisition of Wright Medical for around $ 4 billion … Xerox mulled a bid for
HP Inc.,
helped by $ 2.3 billion in the sale of a stake in a joint venture to Fujifilm … Federal Communications Commission in a party vote votes OK
T-Mobile U.S. .
and Sprint dea … … Walgreens Boots Alliance considered going private … And Tiffany said it would participate in merger talks with
LVMH
if the offer was over $ 120 per share.
Write to Jack Hough at jack.hough@barrons.com
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