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McDonald's (MCD) Gears Up for Q4 Earnings: What's in Store?

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McDonald's Corp. MCD is scheduled to report fourth-quarter 2019 results on Jan 29, before the opening bell. In the last reported quarter, the company’s missed the Zacks Consensus Estimate by a margin of 4.1%.

Which Way Are Estimates Moving?

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.96, lower than the year-ago reported figure of $1.97. Over the past seven days, the company’s earnings estimates have remained stable. For quarterly revenues, the consensus mark stands at $5,302 million, suggesting growth of 2.7% from prior-year quarter.

Let’s delve deeper and analyze the factors likely to shape the company’s top and bottom lines.

Factors at Play

Increase in franchise revenues is likely to have driven the company’s fourth-quarter performance. Notably, the Zacks Consensus Estimate for revenues at franchise-operated restaurants stands at $2,989 million, indicating an improvement of 7.1% from the prior-year quarter. Moreover, increase in sales at International Operated Markets and International Developmental Licensed Segments are likely to get reflected in the fourth-quarter results.

The company’s sales-building initiatives and increase in the global guest count are likely to have contributed to the company’s comparable sales (comps) in fourth-quarter 2019. Moreover, introduction of value meals, customizing menu according to local customer tastes, reimaging of restaurants, efficient marketing and promotions, improved service and increased convenience via delivery have been boosting sales.

What Does the Zacks Model Say?

Our proven model does not 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 odds of an earnings beat. But that's not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: McDonald's has an Earnings ESP of -0.23%.

Zacks Rank: The company has a Zacks Rank #3.

McDonald's Corporation Price and EPS Surprise

 

Stocks With Favorable Combination

Here are some stocks from the Restaurant space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:

Darden Restaurants, Inc. DRI has a Zacks Rank #3 and an Earnings ESP of +0.83%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Denny's Corporation DENN has a Zacks Rank #1 and an Earnings ESP of +5.00%.

Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +4.92% and a Zacks Rank #2.

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