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.
Following the results, the company’s shares are up 3% in the pre-market trading session. During the quarter, MCD benefited from robust comparable sales.
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.
Operating Highlights & Expenses
During the third quarter, McDonald’s total operating costs and expenses were $3,483.9 million, up 12% year over year.
Operating income rose 16% year over year to $3,208.3 million. Net income totaled $2,317.1 million, up 17% year over year.
Zacks Rank
MCD currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the Zacks Retail – Restaurants industry are:
FAT Brands Inc. (FAT - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 28.7%, on average. The stock has declined 24% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FAT’s 2024 sales and EPS suggests improvements of 36.3% and 29.6%, respectively, from the year-ago levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 23.7%, on average. Shares of LOCO have dipped 4.6% in the past year.
The Zacks Consensus Estimate for LOCO’s 2024 sales and EPS indicates 3.4% and 18.7% growth, respectively, from the year-earlier levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 35%, on average. The stock has climbed 25.7% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests advancements of 8.5% and 16.2%, respectively, from the prior-year figures.
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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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.
Following the results, the company’s shares are up 3% in the pre-market trading session. During the quarter, MCD benefited from robust comparable sales.
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.
Operating Highlights & Expenses
During the third quarter, McDonald’s total operating costs and expenses were $3,483.9 million, up 12% year over year.
Operating income rose 16% year over year to $3,208.3 million. Net income totaled $2,317.1 million, up 17% year over year.
Zacks Rank
MCD currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the Zacks Retail – Restaurants industry are:
FAT Brands Inc. (FAT - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 28.7%, on average. The stock has declined 24% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FAT’s 2024 sales and EPS suggests improvements of 36.3% and 29.6%, respectively, from the year-ago levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 23.7%, on average. Shares of LOCO have dipped 4.6% in the past year.
The Zacks Consensus Estimate for LOCO’s 2024 sales and EPS indicates 3.4% and 18.7% growth, respectively, from the year-earlier levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 35%, on average. The stock has climbed 25.7% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests advancements of 8.5% and 16.2%, respectively, from the prior-year figures.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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