Because classic-growth companies tend to have one or more businesses that are well established and mature, it is important to look at what segments are driving growth. It is possible that the mature segments are stagnating and that newer areas are responsible for overall growth rates. A less broad-based growth can make for a riskier investment, with
the company's performance depending on the strength of relatively untried businesses. Worse, if the mature segments enter a decline, the growing businesses may not have enough size or horsepower to compensate.
McDonald's growth is uneven. Over the past three years, overseas sales have accounted for an increasingly large portion of the company's overall revenues. The shift is even more marked in the breakdown of operating income.
However, McDonald's still looks like it's in good shape. Even though growth rates may not be uniform across regions, a glance at the annual report shows that the comparatively slow-growing U.S. operations are still expanding at a respectable clip of around 5% per year. But McDonald's international business has been doing even better, with revenues rising by about 10% to 15% every year. Also, overseas operations now account for well over half of total revenues, so McDonald's slower growing segment has less effect on the company's overall growth.
Is Profitability Keeping Pace with Growth? >>