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McDonald's (MCD) Gears Up for Q3 Earnings: What's in the Cards?
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McDonald's Corporation (MCD - Free Report) is scheduled to report its third-quarter 2022 results on Oct 27, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 4.1%.
How Are Estimates Placed?
The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.57 per share, indicating a decline of 6.9% from the $2.76 reported in the year-ago quarter. For revenues, the consensus mark is pegged at $5,711 million. The metric suggests a deterioration of 7.9% from the year-ago quarter’s figure.
Let's take a look at how things have shaped up in the quarter.
Factors at Play
McDonald's third-quarter performance is likely to be negatively impacted by a decline in internationally operated market revenues. The company’s performance in China is likely to be negatively impacted by softening economy and COVID-related government restrictions. We expect total internationally operated market revenues in third-quarter 2022 to be down nearly 12% year over year.
However, the robust performance of the U.S segment is likely to have boosted the top line. We expect total U.S. segment revenues in third-quarter 2022 to be up nearly 0.4% year over year. Digital efforts, strong marketing campaigns, robust drive-thru presence and expansion initiatives are likely to have aided the results. Moreover, increase in average check growth, menu price increases and compelling value programs also bode well.
However, inflationary pressures are likely to have hurt the margin. We expect the operating margin in third-quarter 2022 to be 47.2% compared with 48.2% reported in the prior-year quarter.
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.
Here are some stocks from the Zacks Retail-Wholesale sector that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the quarter to be reported:
Chipotle Mexican Grill, Inc. (CMG - Free Report) has an Earnings ESP of +2.04% and a Zacks Rank #2.
Shares of Chipotle have declined 12.7% in the past year. CMG’s earnings beat the consensus mark in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 6.2%, on average.
Costco (COST - Free Report) currently has an Earnings ESP of +0.53% and a Zacks Rank #3. The company is expected to register bottom-line growth when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly earnings per share of $3.15 suggests an increase of 6.1% from the year-ago quarter.
Costco's top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $54.98 billion, indicating an increase of 9.2% from the figure reported in the year-ago quarter. COST has a trailing four-quarter earnings surprise of 7.7%, on average.
Foot Locker (FL - Free Report) currently has an Earnings ESP of +16.94% and a Zacks Rank #3. The company is likely to register a bottom-line decline when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.10 suggests a decline from the $1.93 reported in the year-ago quarter.
Foot Locker's top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.10 billion, which indicates a decline of 3.9% from the figure reported in the prior-year quarter. Foot Locker has a trailing four-quarter earnings surprise of 28.6%, on average.
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McDonald's (MCD) Gears Up for Q3 Earnings: What's in the Cards?
McDonald's Corporation (MCD - Free Report) is scheduled to report its third-quarter 2022 results on Oct 27, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 4.1%.
How Are Estimates Placed?
The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.57 per share, indicating a decline of 6.9% from the $2.76 reported in the year-ago quarter. For revenues, the consensus mark is pegged at $5,711 million. The metric suggests a deterioration of 7.9% from the year-ago quarter’s figure.
Let's take a look at how things have shaped up in the quarter.
Factors at Play
McDonald's third-quarter performance is likely to be negatively impacted by a decline in internationally operated market revenues. The company’s performance in China is likely to be negatively impacted by softening economy and COVID-related government restrictions. We expect total internationally operated market revenues in third-quarter 2022 to be down nearly 12% year over year.
However, the robust performance of the U.S segment is likely to have boosted the top line. We expect total U.S. segment revenues in third-quarter 2022 to be up nearly 0.4% year over year. Digital efforts, strong marketing campaigns, robust drive-thru presence and expansion initiatives are likely to have aided the results. Moreover, increase in average check growth, menu price increases and compelling value programs also bode well.
However, inflationary pressures are likely to have hurt the margin. We expect the operating margin in third-quarter 2022 to be 47.2% compared with 48.2% reported in the prior-year quarter.
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 -1.30% 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 sector that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the quarter to be reported:
Chipotle Mexican Grill, Inc. (CMG - Free Report) has an Earnings ESP of +2.04% and a Zacks Rank #2.
Shares of Chipotle have declined 12.7% in the past year. CMG’s earnings beat the consensus mark in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 6.2%, on average.
Costco (COST - Free Report) currently has an Earnings ESP of +0.53% and a Zacks Rank #3. The company is expected to register bottom-line growth when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly earnings per share of $3.15 suggests an increase of 6.1% from the year-ago quarter.
Costco's top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $54.98 billion, indicating an increase of 9.2% from the figure reported in the year-ago quarter. COST has a trailing four-quarter earnings surprise of 7.7%, on average.
Foot Locker (FL - Free Report) currently has an Earnings ESP of +16.94% and a Zacks Rank #3. The company is likely to register a bottom-line decline when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.10 suggests a decline from the $1.93 reported in the year-ago quarter.
Foot Locker's top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.10 billion, which indicates a decline of 3.9% from the figure reported in the prior-year quarter. Foot Locker has a trailing four-quarter earnings surprise of 28.6%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.