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The Zacks Analyst Blog Highlights: Google, McDonald's, Yum! Brands, Chuy's Holdings and Burger King Worldwide

  The Zacks Analyst Blog Highlights: Google, McDonald's, Yum! Brands, Chuy's
                      Holdings and Burger King Worldwide

PR Newswire

CHICAGO, March 12, 2013

CHICAGO, March 12, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Google Inc. (Nasdaq:GOOG),
McDonald's Corp. (NYSE:MCD), Yum! Brands Inc. (NYSE:YUM), Chuy's Holdings Inc.
(Nasdaq:CHUY) and Burger King Worldwide Inc. (NYSE:BKW).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

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from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday's Analyst Blog:

Google to Cut More Jobs

Google Inc. (Nasdaq:GOOG) plans to further eliminate 10% of its workforce, or
about 1,200 jobs, at its Motorola Mobility division. The job cuts will take
place in the U.S., China and India.

This layoff is a part of the company's ongoing efforts to optimize the cost
structure amid declining sales, according to The Wall Street Journal. Last
August, the company had announced its plans to cut 4,000 jobs or 20% of the
workforce. Google had said that the layoff was necessary for Motorola Mobility
to return to profitability.

To recap: Google had acquired cellphone maker Motorola Mobility Holdings last
year in May. The deal was the biggest in its 13-year history. The company
picked up a 100% stake for $40.0 per share in cash or a total consideration of
approximately $12.5 billion.

Although the the company was acquired with the intention of shoring up
Android's patent portfolio, analysts fretted that the deal would be a drag on
Google's earnings. They have been concerned that adding a phone manufacturing
business could hurt Google's margins and would create automatic rivalry with
hardware partners Samsung, HTC and other phone makers that run Android.

Motorola Mobility has not been very profitable for Google so far. The company
has been facing strong competition in the smartphone market from other larger
players

Mickey D's Feb Comps Slump Again

Same-store sales (comps) at McDonald's Corp. (NYSE:MCD) continued to decline
even in the second month of the year as the company witnessed a downward
movement in all its geographical segments in Feb 2013.

Apart from the persistent global economic turmoil and peer pressure, a tough
year-over-year comparison resulted in the comps decline in February. Comps at
McDonald's dipped 1.5% in Feb 2013 as against 7.5% growth in the year-ago
quarter and a decline of 1.9% in Jan 2013.

However, the decline in comps was less than anticipated. Management expected
comps to suffer by approximately 3 percentage points in February. Excluding
the negative calendar shift of 3.2 percentage points, as the year-ago period
had an extra operating day due to the leap year, global comparable sales were
up 1.7%

System-wide sales inched up 1.1% in constant currencies and fell 0.9% on a
reported basis in the month under review.

In the U.S., comps fell the most by 3.3% compared to 11.1% growth recorded in
Feb. 2012 mainly due to negative calendar shift.

Excluding this impact, comps in the U.S. were flat against robust prior-year
performance. The new Grilled Onion Cheddar burger, the Hot 'n Spicy McChicken,
McDonald's value lineup and the limited-time Fish McBites were the month's
highlights.

In Europe, comps fell 0.5% compared with an increase of 4.0% in the year-ago
period. Excluding the adverse calendar shift due to the leap year, comps grew
2.7%. Strong performance in U.K., and Russia was the high point in debt-ridden
Europe. Focus on unique premium menu as well as value proposition and the
expansion of Europe's breakfast and restaurant operating hours drove the
segment's performance.

Comparable sales decreased 1.6% in Asia-Pacific, Middle East and Africa
(APMEA) as against 2.4% growth in the year-ago month. Excluding the tough
comparison arising out of leap year 2012, comps were up 1.5%. The sluggish
performance in Japan was offset by a much better performance in China and
Australia.

The shift of the Chinese New Year in February this year boosted sales in the
month. We believe the negative perception of the consumers about the quality
of chicken offered by U.S restaurateurs like McDonald's and Yum! Brands Inc.
(NYSE:YUM) did not seem to affect sales at McDonald's this time.

Notably, in Dec 2012, Yum! Brands faced an allegation regarding the quality of
chicken supplied to its KFC unit. Although food safety regulators in Shanghai
cleared Yum!, McDonald's apprehended that the incident shattered consumer
confidence about the quality of food offered by U.S. restaurateurs.

Our Take

Although McDonald's has faltered in the recent past, we still believe that the
company has strong value. The company is consistently striving to bounce back
amid a challenging macroeconomic environment by resorting to value-proposition
and menu innovation.

However, McDonald's is still vulnerable to a fragile macro economy. The Oak
Brook, Ill.-based chain is facing extreme challenges on its home turf. Some of
its new menu offerings like Fish McBites, which the company relied heavily on,
could not stir up comps.

The company has little pricing power in Europe due to wavering consumer
confidence. With increased focus on value proposition along with less pricing
power and increasing investments toward media, margins might suffer, going
ahead. On a positive note, Asia-Pacific appears to be better placed.
McDonald's currently retains a Zacks Rank #3 (Hold).

Some restaurateurs that are worth a look at the current level include Chuy's
Holdings Inc. (Nasdaq:CHUY) and Burger King Worldwide Inc. (NYSE:BKW) with a
Zacks Rank #2 (Buy).



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