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McDonald's (MCD) Q4 Earnings & Revenues Surpass Estimates

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McDonald's Corporation (MCD - Free Report) reported fourth-quarter 2022 results, with earnings and revenues beating the Zacks Consensus Estimate. The top line declined year over year, while the bottom line increased from the prior-year quarter's figure.

McDonald's president and chief executive officer, Chris Kempczinski, stated, "While we expect short-term inflationary pressures to continue in 2023, we remain highly confident in Accelerating the Arches, which now includes a greater emphasis on new restaurant openings. The recently announced Accelerating the Organization initiative will complement this strategy to enable the McDonald's System to be faster, more innovative, and more efficient.”

Earnings & Revenue Discussion

During fourth-quarter 2022, McDonald's reported adjusted earnings per share (EPS) of $2.59, surpassing the Zacks Consensus Estimate of $2.46 by 5.3%. In the prior-year quarter, MCD reported an adjusted EPS of $2.18.

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

 

Quarterly net revenues of $5,926.5 million beat the consensus mark of $5,704 million by 3.9%. The top line fell 1% year over year.

At company-operated restaurants, sales were $2,208.4 million, down 13% year over year. The same at franchise-operated restaurants was $3,645 million, up 7% year over year.

Comps Details

In the quarter under discussion, global comps increased 12.6% compared with a rise of 12.3% reported in the prior-year quarter.

Strong Comps Across Segments

U.S.: During the fourth quarter, comps in the segment rose 10.3% year over year, while a gain of 7.5% was reported in the prior-year period. This marks the 10th consecutive quarter of comps growth for the segment. McDonald’s’ comps for the quarter benefited from a menu price increase, positive guest counts and marketing initiatives. This and continued digital and delivery growth contributed to the upside.

International Operated Markets: Comps in the segment increased 12.6% year over year compared with a gain of 16.8% reported in the year-ago quarter. MCD gained from strong comparable sales in Germany, the U.K. and France.

International Developmental Licensed Segment: During the quarter, the segment’s comparable sales increased 16.5% year over year compared with a gain of 14.2% reported in the year-ago quarter. McDonald's gained from robust performance in Japan and Brazil. However, this was partially offset by negative comps in China due to COVID-19-related government restrictions.

Operating Highlights & Expenses

During the fourth quarter, McDonald’s total operating costs and expenses came in at $3,343.8 million, down 7% from the prior-year quarter’s levels.

During the quarter, operating income increased 8% year over year to $2,582.7 million. Net income during the quarter totaled $1,903.4 million, up 16% from $1,638.8 million in the year-ago quarter.

Balance Sheet

As of Dec 31, 2022, cash and equivalents came in at $2,583.8 million compared with $4,709.2 million as of Dec 31, 2021.

Long-term debt as of Dec 31, 2022, was $35,903.5 million compared with $35,622.7 million as of Dec 31, 2021.

2022 Highlights

Total revenues in 2022 amounted to $23,182.6 million compared with $23,222.9 million in 2021.

Net Income in 2022 came in at $6,177.4 million compared with $7,545.2 million reported in 2021.

In 2022, diluted EPS came in at $8.33 compared with $10.04 reported in the previous year.

Zacks Rank & Other Key Picks

McDonald's currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the Zacks Retail-Wholesale sector are Compass Group PLC (CMPGY - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and Yum! Brands, Inc. (YUM - Free Report) .

Compass Group sports a Zacks Rank #1. CMPGY has a long-term earnings growth rate of 19.6%. The stock has gained 3.5% in the past year.  

The Zacks Consensus Estimate for Compass Group’s 2023 sales and EPS suggests growth of 44.4% and 24.7%, respectively, from the year-ago period’s reported levels.

Darden carries a Zacks Rank #2. DRI has a long-term earnings growth rate of 9.8%. Shares of DRI have gained 5.1% in the past year.

The Zacks Consensus Estimate for Darden’s 2023 sales and EPS suggests growth of 7.9% and 5.4%, respectively, from the year-ago period’s reported levels.

Yum! Brands currently carries a Zacks Rank #2. YUM has a long-term earnings growth rate of 11.8%. Shares of YUM have gained 3.1% in the past year.

The Zacks Consensus Estimate for Yum! Brands’ 2023 sales and EPS suggests growth of 6.5% and 16%, respectively, from the year-ago period’s reported levels.

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