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Author: Alan LittleDate: 2020-08-12

McDonald’s (NYSE:MCD) shares stable at $205 valuation despite recent controversies

McDonald’s (NYSE: MCD) sues former CEO for alleged fraud and deception related to an internal investigation just two weeks after Q2 earnings miss on pandemic-related closures.

The recent struggles of McDonald’s (NYSE:MCD) continued on Tuesday after the fast food giant sued former CEO Stephen Easterbrook for fraud and deception related to an internal probe into his behaviour during his tenure.

McDonald’s terminated Easterbrook’s contract last November after it came to light that he had sexual relationships with several employees in the 12 months before he left the company.

The company has also accused him of destroying information when it conducted an investigation into his “inappropriate personal behaviour”.

Renowned analyst Jim Cramer said that the situation is “very, very bad”.

It comes just two weeks after McDonald’s posted underwhelming financial numbers for Q2.

On 28th July, McDonald’s said that adjusted earnings per share for the period was $0.66 versus the $0.74 FactSet consensus.

While certain industries such as gaming have benefited from the stay-at-home measures related to the pandemic, the restaurant business has struggled.

Despite the scale and brand power of McDonald’s, the firm noted that the closing of stores and indoor dining had a negative impact on earnings in Q2.

It has also had to press the pause button on the reopening of restaurants in the US due to the recent rise in COVID-19 cases across the country.

What does this mean for MCD stock moving forward?

Cramer did not suggest that investors should sell McDonald’s stock despite the latest news.

McDonald’s still has 23 ‘buy’ ratings and not a single ‘sell’ rating, in addition to an ‘overweight’ consensus.

The average stock price target is $213.57.

McDonald’s shares did fall 2.1% after it published its quarterly report in late July, but stock has remained very steady this year.

Since 1st January 2020, MCD is just about into the black with gains of 0.20%.

Shares were valued at $205.01 at 10:17am EST on the New York Stock Exchange on Tuesday.

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