McDonald's (MCD Free McDonald’s Stock Report), the world's most recognizable restaurant (serving nearly 68 million customers every day), has reported another quarter of strong results. Earnings were $1.33 a share in the December period, a few pennies above our $1.30 forecast and 16% higher than the year-earlier figure. Global comparable-store sales jumped 7.5% in the quarter, and consolidated revenues climbed 10%, to $6.823 billion, slightly higher than Value Line's $6.767 billion call. Investors had a subdued reaction to the report, and the stock's price was little changed in early morning trading following the release.

Fourth-quarter results were driven by broad-based strength, as comps rose 7.1% in the United States, 7.3% in Europe, and 6.9% in the segment comprised of Asia/Pacific, the Middle East, and Africa. At home, customers continued to be drawn in by convenience, value, redesigned restaurants, classic menu items, and new offerings, such as McCafe drinks. The company also thrived in Europe, despite a high degree of economic uncertainty in the region, as some nations on the Continent struggled with ongoing sovereign-debt issues. Sales were spurred by value and convenience in other areas of the world, as well, boosted by locally relevant menu options.

The company's strong performance in the fourth quarter resulted in share net of $5.27 on sales of $27.006 billion in 2011, representing year-over-year advances of 15% and 12%, respectively. Moreover, margins expanded and the restauranteur gained market share last year, as it continued to focus on giving customers what they want most, namely convenience, value, service, and taste.

We look for McDonald's momentum to continue through 2012. Management indicated that January same-store sales would likely rise somewhere in the 5.5%-6.5% range. Although this would be a slight deceleration from comp growth in the fourth quarter, it would still be a solid gain, in our view. The company also plans to invest heavily in the business this year, with a capital spending budget of roughly $2.9 billion. With this money, management envisions opening more than 1,300 restaurants and remodeling another 2,400, or more. We look for new and reimaged restaurants, a strong value proposition, convenience, and menu innovation to drive good bottom-line growth this year. Indeed, we've added a nickel to our 2012 earnings estimate, which now stands at $5.75 a share.

Although capital appreciation potential is limited at the recent quotation, we believe that these shares still have appeal for conservative, income-oriented investors. McDonald's returned $6.0 billion to shareholders in 2011 through dividends and stock repurchases, a trend that will likely continue through the new year. The issue's dividend yield is above the Value Line median, garners our top score for Safety, and has a low Beta. Additionally, the company operates from an enviable financial position, earning it a top rank for Financial Strength.

About The Company:McDonald's is a quick service restaurant with close to 33,000 locations in more than 115 countries. The majority of the restaurants (about 80%) are operated by franchisees or affiliates. The company is best known for its hamburgers and French fries, but it now has a diverse menu that includes breakfast items and an array of coffee-based drinks.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.