mcdonalds CNBC’s Jim Cramer said Wednesday that turnaround efforts are starting to bear fruit, and investors are likely to be rewarded with more upside going forward.
The fast food giant’s third quarter results showed signs of progress in its sluggish domestic business. U.S. same-store sales fell 0.2%, beating Wall Street expectations for a 0.5% decline, and returned to growth in September after falling in July and August. The positive traffic trend continued in October.
McDonald’s stock rose 6.5% on Wednesday, extending its rebound from early October lows to more than 20%. At the low point, the stock had lost about a third of its all-time high in March, due to weak U.S. sales and increased competition from the resurgent Burger King.
“We’re seeing progress with the Golden Arches, which is why the stock price is doing much better than it was just a few months ago,” the “Mad Money” host said. “I still like McDonald’s. I’m glad I stuck with McDonald’s. I think this stock will go higher.”
Cramer on Oct. 1 described McDonald’s as a “show me” story after a disappointing investor day in September raised concerns about restaurant renovation costs and franchisee support for the plan. Nevertheless, he called the stock price “attractive” and said he’d rather be a buyer than a seller at that level.
McDonald’s increased its focus on affordability in the September quarter, bringing back digital promotions and shifting marketing to value products such as $5 and $6 meal deals. CEO Chris Kempczinski told Kramer on Wednesday morning that “baseline guest numbers have begun to stabilize due to the interventions we have made in the U.S. and we have seen progress throughout the quarter.”
Still, the quarter wasn’t perfect and challenges remain. McDonald’s fell short of earnings expectations, while the slump in the French economy weighed on overseas performance. McDonald’s plans to expand its entry-level value offering, strengthen digital promotions, and improve food quality and service. The company is also testing two new value menus and plans to roll out stronger options nationwide in early 2027.
The stock is well above its October lows, and Cramer cautioned that further gains will depend not only on an attractive valuation but also on sustained execution.
“McDonald’s stock was very attractive on a valuation basis at its low price a month ago, which is why I had the confidence to stick with the stock even though the fundamentals looked weak,” he said. “Stock prices are well off their lows at this point, and continued execution will be needed for McDonald’s stock to continue returning toward the highs it set earlier this year.”
