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Why Is McDonald's (MCD) Up 1.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for McDonald's (MCD - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is McDonald's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
McDonald's Q3 Earnings & Revenues Beat Estimates
McDonald's reported third-quarter 2024 results, with both earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
MCD’s Earnings & Revenue Performance
In third-quarter 2024, McDonald's reported adjusted earnings per share (EPS) of $3.23, which beat the Zacks Consensus Estimate of $3.18. Moreover, adjusted earnings rose 1% year over year.
Quarterly net revenues of $6,873 million surpassed the consensus mark of $6,796 million. The top line increased 3% year over year.
At company-operated restaurants, sales totaled $2.66 billion, up 4% year over year. Sales at franchise-operated restaurants amounted to $4.09 billion, which increased 1% year over year. Other revenues rose 39% year over year to $124 million. Our model predicted sales by company-operated and franchise-operated restaurants to rise 0.6% and 0.12%, respectively, from the prior-year levels.
McDonald's Comps Details
In the quarter under discussion, global comps declined 1.5% against 8.8% growth in the prior-year quarter. Our estimate was a 0.6% decline year over year. The company’s comps decreased for the second straight quarter.
Comps Across MCD’s Segments
United States: In the third quarter, segmental comps rose 0.3% compared with 8.1% growth in the prior-year quarter. The comparable sales results indicated growth in the average check, though this was partially offset by a slight decline in comparable guest counts. Effective value and marketing campaigns centered on core menu items, strong execution at the restaurant level and ongoing growth in digital and delivery channels collectively supported modestly positive comparable sales. Our model estimated the U.S. comps to decrease 1.1%.
International Operated Markets: Segmental comps decreased 2.1% against 8.3% growth in the year-ago quarter. The performance of the segment was affected by declining comparable sales in several markets, with France and the United Kingdom being significant contributors to this downturn. We anticipated a decrease of 0.3% from the year-ago levels.
International Developmental Licensed Segment: Segmental comparable sales registered a 3.5% decline against 10.5% growth in the prior-year quarter. The ongoing conflict in the Middle East and declining comparable sales in China outweighed the positive sales performance in Latin America.
Operating Highlights & Expenses of McDonald's
In the third quarter, McDonald’s total operating costs and expenses were $3.69 billion, up 6% year over year.
Operating income dropped 1% year over year to $3.19 billion. Net income totaled $2.26 billion, down 3% year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, McDonald's has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, McDonald's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is McDonald's (MCD) Up 1.2% Since Last Earnings Report?
A month has gone by since the last earnings report for McDonald's (MCD - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is McDonald's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
McDonald's Q3 Earnings & Revenues Beat Estimates
McDonald's reported third-quarter 2024 results, with both earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
MCD’s Earnings & Revenue Performance
In third-quarter 2024, McDonald's reported adjusted earnings per share (EPS) of $3.23, which beat the Zacks Consensus Estimate of $3.18. Moreover, adjusted earnings rose 1% year over year.
Quarterly net revenues of $6,873 million surpassed the consensus mark of $6,796 million. The top line increased 3% year over year.
At company-operated restaurants, sales totaled $2.66 billion, up 4% year over year. Sales at franchise-operated restaurants amounted to $4.09 billion, which increased 1% year over year. Other revenues rose 39% year over year to $124 million. Our model predicted sales by company-operated and franchise-operated restaurants to rise 0.6% and 0.12%, respectively, from the prior-year levels.
McDonald's Comps Details
In the quarter under discussion, global comps declined 1.5% against 8.8% growth in the prior-year quarter. Our estimate was a 0.6% decline year over year. The company’s comps decreased for the second straight quarter.
Comps Across MCD’s Segments
United States: In the third quarter, segmental comps rose 0.3% compared with 8.1% growth in the prior-year quarter. The comparable sales results indicated growth in the average check, though this was partially offset by a slight decline in comparable guest counts. Effective value and marketing campaigns centered on core menu items, strong execution at the restaurant level and ongoing growth in digital and delivery channels collectively supported modestly positive comparable sales. Our model estimated the U.S. comps to decrease 1.1%.
International Operated Markets: Segmental comps decreased 2.1% against 8.3% growth in the year-ago quarter. The performance of the segment was affected by declining comparable sales in several markets, with France and the United Kingdom being significant contributors to this downturn. We anticipated a decrease of 0.3% from the year-ago levels.
International Developmental Licensed Segment: Segmental comparable sales registered a 3.5% decline against 10.5% growth in the prior-year quarter. The ongoing conflict in the Middle East and declining comparable sales in China outweighed the positive sales performance in Latin America.
Operating Highlights & Expenses of McDonald's
In the third quarter, McDonald’s total operating costs and expenses were $3.69 billion, up 6% year over year.
Operating income dropped 1% year over year to $3.19 billion. Net income totaled $2.26 billion, down 3% year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, McDonald's has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, McDonald's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.