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Can McDonald's (MCD) Pull a Surprise this Earnings Season?
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Burger giant McDonald's Corp. (MCD - Free Report) is slated to release fourth-quarter and fiscal 2016 results on Jan 23, before the market opens.
Last quarter, McDonald's posted a 9.46% positive earnings surprise. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 6.16%.
Let’s see how things are shaping up for this announcement.
McDonald’s comps have improved in its key regions over the last few quarters, marking a trend that will likely continue in the fourth quarter. This appears to be the result of the company’s strategic efforts to boost sales. Consistent with these efforts, the company has been focusing on product innovation, offering a value menu and rolling out more limited-time offerings. Additionally, the company is working on trimming complicated menus to speed up service and pumping up operational procedures as well as training programs.
Further, the company’s All Day Breakfast platform – which has been immensely popular – is expected to continue being successful. In fact, the company recently launched the second phase of All Day Breakfast, which should continue to drive revenues.
However, a slowdown in emerging markets and soft industry growth could dent sales, while high costs along with negative currency translation might hurt the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show that McDonald’s is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP for McDonald's stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.41 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: McDonald's currently carries a Zacks Rank #3 (Hold). However, an ESP of 0.00% makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 and #5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies in the Retail-Restaurants industry that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
YUM! Brands, Inc. (YUM - Free Report) has an Earnings ESP of +2.82% and a Zacks Rank #3.
Panera Bread Company has an Earnings ESP of +0.5% and a Zacks Rank #3.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>
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Can McDonald's (MCD) Pull a Surprise this Earnings Season?
Burger giant McDonald's Corp. (MCD - Free Report) is slated to release fourth-quarter and fiscal 2016 results on Jan 23, before the market opens.
Last quarter, McDonald's posted a 9.46% positive earnings surprise. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 6.16%.
Let’s see how things are shaping up for this announcement.
McDonald's Corp. Price and EPS Surprise
McDonald's Corp. Price and EPS Surprise | McDonald's Corp. Quote
Factors to Consider
McDonald’s comps have improved in its key regions over the last few quarters, marking a trend that will likely continue in the fourth quarter. This appears to be the result of the company’s strategic efforts to boost sales. Consistent with these efforts, the company has been focusing on product innovation, offering a value menu and rolling out more limited-time offerings. Additionally, the company is working on trimming complicated menus to speed up service and pumping up operational procedures as well as training programs.
Further, the company’s All Day Breakfast platform – which has been immensely popular – is expected to continue being successful. In fact, the company recently launched the second phase of All Day Breakfast, which should continue to drive revenues.
However, a slowdown in emerging markets and soft industry growth could dent sales, while high costs along with negative currency translation might hurt the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show that McDonald’s is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP for McDonald's stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.41 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: McDonald's currently carries a Zacks Rank #3 (Hold). However, an ESP of 0.00% makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 and #5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies in the Retail-Restaurants industry that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
YUM! Brands, Inc. (YUM - Free Report) has an Earnings ESP of +2.82% and a Zacks Rank #3.
Panera Bread Company has an Earnings ESP of +0.5% and a Zacks Rank #3.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>