McDonald's turnaround efforts are beginning to pay off and investors will likely be rewarded with more upside ahead, CNBC's Jim Cramer said Wednesday.
The fast-food giant's third-quarter earnings showed signs of progress in its struggling domestic business. U.S. same-store sales declined 0.2%, better than the 0.5% drop Wall Street expected, and returned to growth in September after falling in July and August. Encouraging traffic trends continued into October.
McDonald's shares surged 6.5% Wednesday, extending the rebound from their early-October lows to more than 20%. At the low, the stock had lost roughly a third of its value from its all-time high in March amid weakening U.S. sales and growing competition from a revitalized Burger King .
"We're seeing progress for the Golden Arches, and that's why the stock is doing so much better than it was just a couple of months ago," the " Mad Money " host said. "I still like McDonald's – I'm glad I stuck with it, and I think you're going to get higher prices for this stock."
Cramer on Oct. 1 described McDonald's as a " show me" story after a disappointing September investor day raised concerns about the cost of restaurant renovations and franchisee support for the plan. Nevertheless, he called the stock "tempting," and said he'd rather be a buyer at those levels than a seller.
McDonald's intensified its focus on affordability during the September quarter, restoring digital promotions and shifting marketing toward value offerings, including $5 and $6 meal deals. "The interventions we made in the U.S. began to stabilize baseline guest counts, and we saw progress through the quarter," CEO Chris Kempczinski told Cramer on Wednesday morning.
Still, the quarter wasn't perfect and challenges remain. McDonald's missed revenue expectations, while weakness in France weighed on international results. McDonald's plans to expand entry-level value offerings, strengthen digital promotions and improve food quality and service. The company is also testing two new value menus, with plans to roll out the stronger option nationwide in early 2027.
With shares well above their October lows, Cramer cautioned that further gains will depend on sustained execution rather than an attractive valuation alone.
"McDonald's shares were extremely compelling on a valuation basis at their lows a month ago – that's why I had confidence sticking with the stock even when the fundamentals looked weak," he said. "With the stock well off its lows at this point, we'll need to see continued execution for McDonald's shares to continue their run back towards the highs set earlier this year."
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