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McDonald's (MCD) Q2 Earnings and Revenues Beat Estimates

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McDonald's Corporation (MCD - Free Report) reported second-quarter 2021 results, wherein both earnings and revenues handily beat the Zacks Consensus Estimate. It is to be noted that the top and bottom lines beat the consensus mark for two consecutive quarters.

Robust drive-thru presence and its investments in delivery and digital over the past few years have aided the company amid the ongoing crisis. Robust digitalization will continue to help it in driving long-term growth and capturing market share.

McDonald's president and CEO Chris Kempczinski said “Our performance is a continued demonstration of the broad-based strength and resiliency of our business as global comp sales in the second quarter increased nearly 7% over 2019. For 65 years, we’ve created iconic experiences for billions of people around the world.”

The company reported adjusted earnings of $2.37 per share, which surpassed the Zacks Consensus Estimate of $2.12. The bottom line also improved 259.1% year over year. Meanwhile, foreign currency translation had a positive impact of 13 cents per share on earnings for the quarter under review.

McDonalds Corporation Price, Consensus and EPS Surprise

McDonalds Corporation Price, Consensus and EPS Surprise

McDonalds Corporation price-consensus-eps-surprise-chart | McDonalds Corporation Quote

Revenues & Comps Discussion

For the second quarter, revenues of $5,887.9 million beat the Zacks Consensus Estimate of $5,629 million. The figure also rose 56.5% year over year. The top line benefited from an increase in global comparable sales.

At company-operated restaurants, revenues were $2,488.7 million, up 56.1% year over year. The same at franchise-operated restaurants came in at $3,306.2 million, up 58.3% year over year.

For the quarter, global comps advanced 40.5% against a decline of 23.9% in the prior-year quarter. This marks the second consecutive comps growth, after reporting a decline in the preceding four quarters.

Solid Comps Across Segments

U.S.: Comps at this segment rose 25.9% for the second quarter versus a decline of 8.7% in the prior-year period. The company’s comps for the quarter gained from robust average check growth backed by larger order size and menu price increases.

International Operated Markets: Comps at this segment grew 75.1% year over year against a decline of 41.4% in the year-ago quarter. This upside was driven by solid comparable sales in the U.K. and France as well as positive comparable sales across the entire segment.

International Developmental Licensed Segment: The segment’s comparable sales increased 32.3% for the second quarter. In the prior-year quarter, the segment’s comps declined 24.2%.

2021 Guidance

The company expects system-wide sales growth in mid-to-high teens (in constant currencies) for 2021. It also expects net restaurant unit growth to contribute 1% to 2021 system-wide sales growth.

Operating margin is expected in the low-to-mid 40% range. The company anticipates capital expenditure to be $2.3 billion, about half of which will be directed toward new unit expansion across the United States and International Operated Markets.

Zacks Rank & Key Picks

McDonald's carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Retail - Restaurants include Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) , Dine Brands Global, Inc. (DIN - Free Report) and The Cheesecake Factory Incorporated (CAKE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cracker Barrel’s earnings for the current year are expected to rise 163.7%.

Dine Brands and Cheesecake Factory’s 2021 earnings are expected to rise 269.3% and 253%, respectively.

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