Thursday, September 9, 2010

Update on Yesterday's McDonald's Update

How the Street works.

Or doesn't.

Having mentioned relative bullishness on McDonald's (MCD) a week or so earlier, after the close of trading yesterday I posted a brief note on MCD titled McDonald's Update: Selling on the Bullish Commentary. I didn't like bullish comments about its routine report on August monthly sales.

Here's what happened. Per the corporate press release: McDonald's Posts Strong Global Comparable Sales - August Up 4.9%

But the Street spun it rather strangely, per McDonald’s August Sales Rise 4.9%, Missing Estimates

How much was the "miss"?

Sept. 9 (Bloomberg) -- McDonald’s Corp., the world’s largest restaurant chain, said comparable-store sales climbed 4.9 percent last month from a year earlier, missing analyst estimates, as growth in demand came up short in Europe.

Analysts projected global sales would advance 5 percent, the median of three estimates compiled by Bloomberg.

The stock is down 3% (over $2) on this "miss" based on estimates of three analysts. Why three analysts, and which three? It appears as though a full 20 analysts have guesstimates for the September quarter earnings. Do the other 17 just not bother predicting monthly sales?

Well, Big Finance got its commissions out of me. I sold all my MCD Tuesday and Wednesday on the price strength, sold covered calls on the rest, and then bought some back today.

These sorts of shenanigans remind anyone paying attention that everything that emanates from the financial community is for its perceived benefit. What benefits it may or may not benefit you.

Copyright (C) Long Lake LLC 2010

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