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Factors Setting the Tone for McDonald's (MCD) Q3 Earnings

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McDonald's Corporation (MCD - Free Report) is scheduled to report third-quarter 2021 results on Oct 27, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 11.8%.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.46 per share, indicating an improvement of 10.8% from the prior-year quarter. The consensus mark for revenues stands at $6,024 million, suggesting growth of 11.2% from the year-ago reported quarter.

Factors to Note

McDonald's third-quarter performance is likely to have benefited from its expansion efforts, robust digitalization, loyalty program and comps growth. The company has been gaining from its drive-thru facility. Previously, the company had stated that more than 80% of its restaurants across 100 markets globally provide delivery. In the United States, 95% of its restaurants provide drive-thru facility. Over the past year, delivery sales mix has doubled in Australia, Canada and the United States. During the first half of 2021, it recorded approximately $8 billion in digital sales in its top six markets, reflecting a gain of 70% compared with last year.

After reporting dismal comps in the trailing four quarters due to the coronavirus pandemic, the company reported robust comps in first and second-quarter 2021. The uptrend is likely to have continued in the third quarter. In the quarter to be reported, global comps advanced 40.5% against a decline of 23.9% in the prior-year quarter.

Robust company-operated restaurants sales and franchise-operated restaurants revenues might have driven the company’s to-be-reported quarter’s performance. The Zacks Consensus Estimate for company-operated restaurants sales is pegged at $2,522 million, indicating an improvement of 10.3% from the year-ago quarter. The consensus mark for franchise-operated restaurants revenues stands at $3,389 million, suggesting growth of 11.3% from the prior-year reported figure. However, dismal traffic might have weighed on the company’s third-quarter performance.

McDonald's Corporation Price and EPS Surprise McDonald's Corporation Price and EPS Surprise

McDonald's Corporation price-eps-surprise | McDonald's Corporation Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for McDonald's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

McDonald's has an Earnings ESP of -0.25% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Retail-Wholesale space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Cheesecake Factory Incorporated (CAKE - Free Report) has an Earnings ESP of +0.98% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Five Below, Inc. (FIVE - Free Report) has an Earnings ESP of +3.90% and a Zacks Rank #3.

Wingstop Inc. (WING - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank #3.

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