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McDonald's (MCD) Beats Overall in Q3: ETFs to Benefit
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McDonald's Corporation (MCD - Free Report) reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the fifth straight quarter and increased on a year-over-year basis. During the quarter, MCD benefited from robust comparable sales. Following the results, the company’s shares gained about 1.7% in the key trading session on Oct 30.
Earnings & Revenue Discussion
During third-quarter 2023, McDonald's reported adjusted earnings per share (EPS) of $3.19, outpacing the Zacks Consensus Estimate of $3.00. Adjusted earnings increased 16% from the prior year. Quarterly net revenues of $6,692.2 million outpaced the consensus mark of $6,574 million. The top line rose 14% year over year.
At company-operated restaurants, sales were $2,556.2 million, up 20% year over year. Sales at franchise-operated restaurants amounted to $4,047.1 million and improved 10% year over year. Other revenues jumped 17% year over year to $88.9 million. Our model predicted sales by company-operated and franchise-operated restaurants to gain 9.6% and 6.6% year over year, respectively.
Comps Details
In the quarter under discussion, global comps expanded 8.8% compared with 11.7% in the prior-year quarter. Our estimate was 9.1%.
Strong Comps Across Segments
U.S.: During the third quarter, segmental comps rose 8.1% year over year compared with 6.1% a year ago. Comps benefited from a menu price increase, positive guest counts, marketing initiatives and robust digitalization. Our model estimated U.S. comps to climb 9.8%.
International Operated Markets: Segmental comps extended 8.3% year over year compared with 8.5% in the year-ago quarter. Strong comparable sales in the Germany and the U.K. resulted in the uptick. We anticipated a 9% year-over-year rise.
International Developmental Licensed Segment: Segmental comparable sales registered a 10.5% gain year over year compared with 16.7% in the prior-year quarter. McDonald's benefited from robust comps in all geographic locations. Our model anticipated the metric to improve 7.8% year over year.
ETFs in Focus
Post the release of earnings, MCD shares rose on almost 3 times elevated volume. But then, MCD stock has downbeat Value, Growth and Momentum scores of “D”, “D” and “F.” Hence, those who are in two minds in betting over MCD despite upbeat earnings results, may find the MCD-heavy ETF investing helpful. This is because the basket approach minimizes the company-specific concentration risks.
SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) ) – 5.14% Exposure to McDonalds
The Dow Jones Industrial Average is composed of thirty blue-chip U.S. stocks.
Zacks ETF Rank #1 (Strong Buy)
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) – 4.64% Exposure to McDonalds
The underlying Index seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.
Zacks ETF Rank #1
LAFFER TENGLER Equity Income ETF (TGLR - Free Report) – 4.61% Exposure to McDonalds
The ETF is an actively managed Fund that seeks to achieve its investment objective by investing in high quality, large-cap stocks that have strong earnings and dividend growth potential and an above market dividend yield.
The ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business.
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McDonald's (MCD) Beats Overall in Q3: ETFs to Benefit
McDonald's Corporation (MCD - Free Report) reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the fifth straight quarter and increased on a year-over-year basis. During the quarter, MCD benefited from robust comparable sales. Following the results, the company’s shares gained about 1.7% in the key trading session on Oct 30.
Earnings & Revenue Discussion
During third-quarter 2023, McDonald's reported adjusted earnings per share (EPS) of $3.19, outpacing the Zacks Consensus Estimate of $3.00. Adjusted earnings increased 16% from the prior year. Quarterly net revenues of $6,692.2 million outpaced the consensus mark of $6,574 million. The top line rose 14% year over year.
At company-operated restaurants, sales were $2,556.2 million, up 20% year over year. Sales at franchise-operated restaurants amounted to $4,047.1 million and improved 10% year over year. Other revenues jumped 17% year over year to $88.9 million. Our model predicted sales by company-operated and franchise-operated restaurants to gain 9.6% and 6.6% year over year, respectively.
Comps Details
In the quarter under discussion, global comps expanded 8.8% compared with 11.7% in the prior-year quarter. Our estimate was 9.1%.
Strong Comps Across Segments
U.S.: During the third quarter, segmental comps rose 8.1% year over year compared with 6.1% a year ago. Comps benefited from a menu price increase, positive guest counts, marketing initiatives and robust digitalization. Our model estimated U.S. comps to climb 9.8%.
International Operated Markets: Segmental comps extended 8.3% year over year compared with 8.5% in the year-ago quarter. Strong comparable sales in the Germany and the U.K. resulted in the uptick. We anticipated a 9% year-over-year rise.
International Developmental Licensed Segment: Segmental comparable sales registered a 10.5% gain year over year compared with 16.7% in the prior-year quarter. McDonald's benefited from robust comps in all geographic locations. Our model anticipated the metric to improve 7.8% year over year.
ETFs in Focus
Post the release of earnings, MCD shares rose on almost 3 times elevated volume. But then, MCD stock has downbeat Value, Growth and Momentum scores of “D”, “D” and “F.” Hence, those who are in two minds in betting over MCD despite upbeat earnings results, may find the MCD-heavy ETF investing helpful. This is because the basket approach minimizes the company-specific concentration risks.
SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) ) – 5.14% Exposure to McDonalds
The Dow Jones Industrial Average is composed of thirty blue-chip U.S. stocks.
Zacks ETF Rank #1 (Strong Buy)
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) – 4.64% Exposure to McDonalds
The underlying Index seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.
Zacks ETF Rank #1
LAFFER TENGLER Equity Income ETF (TGLR - Free Report) – 4.61% Exposure to McDonalds
The ETF is an actively managed Fund that seeks to achieve its investment objective by investing in high quality, large-cap stocks that have strong earnings and dividend growth potential and an above market dividend yield.
AdvisorShares Restaurant ETF (EATZ - Free Report) – 4.43% Exposure to McDonalds
The ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business.