June 11, 2014 4:35 am JST

McDonald's Japan at 11-year high on hopes for new CEO

TOKYO -- McDonald's Holdings Co. (Japan) shares climbed a third straight session Tuesday to their highest since August 2002, spurred by hopes that earnings will recover under recently installed President and Chief Executive Officer Sarah Casanova.

     The stock reached 2,965 yen ($28.66) at one point, topping the recent peak hit in May 2013.

     The company is focusing on new menu items targeted at women and families in a bid to revive flagging sales. Its reforms have paid off to a degree, with some stores selling out of a new burger with avocado.

     Sales for all stores declined 3% on the year in May, an improvement over the 6% drop in group sales initially projected for the January-June half.

     For the last two years, monthly sales have logged year-on-year growth in June, which usually marks the start of summer promotional campaigns.

     "Consumer spending is strong, so hopes are high that it will be able to achieve growth on the year this year as well," says Mitsushige Akino of Ichiyoshi Asset Management.

     Furthermore, a new menu has been introduced for the World Cup soccer tournament, which kicks off this week.

     But the stock does not seem like much of a bargain, with a projected price-earnings ratio of 66 for this fiscal year and a dividend yield of 1%. Clear profit growth will be key to a further rally.