McDonald's on Monday reported earnings and revenue that outpaced analysts' estimates as turnaround efforts started to show results, especially in markets outside the U.S.
The fast-food giant posted earnings excluding items of $1.44 per share, up from the $1.31 a share the company earned last year.
Revenue fell 5 percent to $6.03 billion, down from $6.34 billion a year ago. However, revenue was down only 3 percent on a constant currency basis, and the decline in the latest period was narrower than some analysts expected.
Analysts polled by Reuters had expected the company to report adjusted earnings of about $1.41 per share on $5.99 billion in revenue.
Global same-store sales were also stronger than expected, rising 2.7 percent, driven by gains in its international lead markets, high growth and foundational segments. McDonald's benefited from stronger sales in the U.K, China, Japan and some Latin American markets.
"Throughout 2016, we worked diligently to lay the groundwork for our long-term future," President and Chief Executive Officer Steve Easterbrook said in a press release, referring to the company's efforts to revamp its menu and technology to improve the customer experience.
"Our efforts yielded a more streamlined and focused organization that generated solid fourth quarter and full year results, including our strongest annual global comparable sales growth since 2011 along with record franchisee cash flows in many of our major markets," Easterbrook said. "I am confident that we're on the right path."
In the U.S., however, the company's performance wasn't as strong. Fourth-quarter comparable sales fell 1.3 percent, hurt by the comparison against last year's strong performance led by the start of its All-Day Breakfast program. Operating income fell 11 percent.
McDonald's shares were recently trading down about 1 percent.
Some analysts were expecting winter weather to hurt McDonald's fourth-quarter sales, as many in the U.S. restaurant industry saw a slump in sales during December and January after a stronger November.
Overall, the results were "pretty encouraging and the McDonald's story is still on track," R.J. Hottovy, an analyst at Morningstar, said on CNBC's "Squawk Box."
However, Conlumino analyst Neil Saunders said the latest results are testing the early optimism around its turnaround program, citing the slip in U.S. same-store sales.
"McDonald's is now lapping some tougher comparatives, especially in the U.S. where, this time last year, it was reaping the rewards of menu reconfiguration and the introduction of the All Day Breakfast," Saunders said. "These changes were supposed to drive a steady and sustainable uplift in spending rather than a one-off spike in sales, but it is increasingly clear that this strategy is not delivering through."
As a result, Saunders said he sees McDonald's facing higher costs due to a more complex menu, which aren't being offset by an increase in customer traffic.
"Widening the audience in a sustainable way is the key issue for McDonald's as it enters is new fiscal year," he said. "This has to be more than about menu change. ... Indeed, it is clear that the menu changes made so far have not completely reinvigorated the brand with younger and more discerning consumer segments, many of whom still shun the chain in favor of what they see as more premium offerings from other players."
Outside the U.S., things were a bit more positive. Comparable sales in McDonald's international lead markets rose 2.8 percent in the latest period, led by the U.K. Operating income in the segment rose 1 percent.
A strong performance in China and positive results across other areas in McDonald's high growth segment led to a 4.7 percent jump in comparable sales.
In foundational markets, comparable sales surged 11.1 percent, led by a strong performance in Japan and certain Latin American markets.
Shares of the company were up about 5.5 percent from September to December, according to FactSet.
—CNBC's Sarah Whitten contributed to this report.