McDonald's Corporation (MCD Quick QuoteMCD - Free Report) reported second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the fourth straight quarter and increased on a year-over-year basis.

Following the results, the company’s shares are up 2% in the pre-market trading session. During the quarter, MCD benefited from robust comparable sales.

Earnings & Revenue Discussion

During second-quarter 2023, McDonald's reported adjusted earnings per share (EPS) of $3.17, outpacing the Zacks Consensus Estimate of $2.77 by 14.4%. Adjusted earnings increased 24.3% from the prior-year quarter.

Quarterly net revenues of $6,497.5 million beat the consensus mark of $6,229 million. The top line rose 13.6% year over year.

At company-operated restaurants, sales were $2,487 million, up 18% year over year. Sales at franchise-operated restaurants amounted to $3,933.3 million and improved 12% year over year. However, Other revenues declined 2% year over year to $77.2 million. Our model predicted sales by company-operated and franchise-operated restaurants to gain 3.6% and 3.2% year over year, respectively.

Comps Details

In the quarter under discussion, global comps increased 11.7% compared with a rise of 9.7% reported in the prior-year quarter. Our estimate was 7.4%.
Strong Comps Across Segments

U.S.: During the second quarter, comps in the segment rose 10.3% year over year. In the prior-year period, the metric improved 3.7%. Comps benefited from a menu price increase, positive guest counts, marketing initiatives and robust digitalization. Our model estimated U.S. comps to increase 7%.

International Operated Markets: Comps in the segment increased 11.9% year over year. The metric gained 13% in the year-ago quarter. Strong comparable sales in Germany and the U.K resulted in the uptick. We anticipated a 7.8% year-over-year rise.

International Developmental Licensed Segment: Segmental comparable sales increased 14% year over year. The metric recorded a rise of 16% in the year-ago quarter. McDonald's gained from robust performance in China. Our model precited the metric to increase 8% year over year.

Operating Highlights & Expenses

During the second quarter, McDonald’s total operating costs and expenses were $3,393.4 million, down 15% year over year.

Operating income increased 81% year over year to $3,104.1 million. Net income totaled $2,310.4 million, up 94% year over year.

Zacks Rank & Other Key Picks

McDonald's currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the Zacks Retail – Restaurants industry include:

Dave & Buster's Entertainment, Inc. (PLAY Quick QuotePLAY - Free Report) sports a Zacks Rank #1 (Strong Buy). PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 23.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates rises of 17% and 29%, respectively, from the year-ago period’s levels.

BJ's Restaurants, Inc. (BJRI Quick QuoteBJRI - Free Report) carries a Zacks Rank #2. BJRI has a long-term earnings growth rate of 15%. The stock has rallied 42.2% in the past year.

The Zacks Consensus Estimate for BJ's Restaurants’ 2023 sales and EPS suggests growth of 5.5% and 329.4%, respectively, from the year-ago period’s levels.

Chuy's Holdings, Inc. carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have skyrocketed 85.7% in the past year.

The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests gains of 9.9% and 27.7%, respectively, from the year-ago period’s levels.