McDonald's is the new 'Value Meal,' says trader Mike Khouw
McDonald's announced this week that it is revising its U.S. value strategy after recording its slowest sales growth in more than a year.
TL;DR
- McDonald's is revising its U.S. value strategy after experiencing its slowest sales growth in over a year.
- Customer perception of McDonald's as a good value has fallen from 55% in 2020 to about 40% in 2024.
- Comparable sales rose only 0.8% in Q2, while spending by households earning under $40,000 declined.
- McDonald's stock has been essentially unchanged over five years, but revenue, net income, and free cash flow have increased.
- A proposed trading strategy includes selling a put and buying a call spread to profit from a potential stock price increase.
- The company aims to restore the perception of good value, acknowledging a true return of the 'Dollar Menu' is unlikely due to inflation.