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McDonald's (MCD) Stock Up on Q3 Earnings and Revenues Beat

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McDonald's Corporation (MCD - Free Report) reported strong third-quarter 2021 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. It is worth mentioning that both the top and bottom lines have surpassed the Zacks Consensus Estimate for the third consecutive quarter. Both the metrics also improved year over year. Following the results, the company’s shares are up 3.5% in pre-market trading session.

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

McDonald's president and CEO Chris Kempczinski said, “We continue to execute our strategic growth plan and run great restaurants so that we can drive long-term, sustainable growth for all of our stakeholders.”

The company reported adjusted earnings of $2.76 per share, which surpassed the Zacks Consensus Estimate of $2.46. The bottom line improved 24% year over year. Meanwhile, foreign currency translation had a positive impact of 4 cents per share on earnings for the quarter under review.

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

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

Revenues & Comps Discussion

For the third quarter, revenues amounted to $6,201.3 million, which beat the Zacks Consensus Estimate of $6,024 million. The figure advanced 14% year over year. The top line benefited from an increase in global comparable sales.

At company-operated restaurants, sales were $2,598.4 million, up 14% year over year. The same at franchise-operated restaurants were $3,510.2 million, up 15% year over year.

For the quarter, global comps advanced 12.7% against a decline of 2.2% in the prior-year quarter. This marks the third consecutive quarter of comps growth, after reporting a decline in the preceding four quarters.

Solid Comps Across Segments

U.S.: Comps at this segment rose 9.6% for the third quarter against a gain of 4.6% in the prior-year period. The company’s comps for the quarter benefited from robust average check growth.

International Operated Markets: Comps at this segment grew 13.9% year over year against a decline of 4.4% in the year-ago quarter.

International Developmental Licensed Segment: The segment’s comparable sales increased 16.7% for the third quarter. In the prior-year quarter, the segment’s comps declined 10.1%.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the Zacks Retail - Restaurants industry space include Darden Restaurants, Inc. (DRI - Free Report) , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Papa John's International, Inc. (PZZA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden Restaurants has a three five-year earnings per share growth rate of 10%.

Dave & Buster's has a trailing four-quarter earnings surprise of 201.8%, on average.

Papa John's 2021 earnings are expected to surge 124.3%.