Is McDonald’s Stock Finally a Buy?

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With McDonald’s (NYSE:MCD) showing signs of stabilization after releasing disappointing financial results last month, is the blue-chip member a BUY, a WAIT and SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

E = Earnings Are Increasing Quarter over Quarter

In October, the land of the golden arches reported its financial results for the third quarter. Net income fell to $1.46 billion ($1.43 per share), compared to $1.51 billion ($1.45 per share) a year earlier. Revenue for the company also edged slightly lower to $7.15 billion, compared to $7.17 billion in the same period last year. Analysts polled by Thomson Reuters had predicted earnings of $1.47 per share.

“While our sales momentum and current financial results reflect today’s challenging conditions, we continue to see significant long-term opportunities for brand McDonald’s and remain confident in the underlying strength of our business model,” said McDonald’s CEO Don Thompson. “We have the right plans in place to drive long-term profitable growth along with the experience and alignment throughout the McDonald’s System to navigate the current environment.”

It was the second consecutive miss for McDonald’s, and earnings have seen some declines over recent quarters. For the first quarter of 2012, earnings fell to $1.23 a share, down from $1.33 in the fourth quarter of 2011. Furthermore, the fast-food giant recently reported its first monthly sales decline in more than nine years. Global comparable sales dropped 1.8 percent in October, the first monthly decline since March 2003.

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