Back to top

Image: Bigstock

McDonald's (MCD) Earnings & Revenues Top Estimates in Q4

Read MoreHide Full Article

McDonald's Corporation (MCD - Free Report) reported fourth-quarter 2019 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate after missing the same in the preceding quarter.

Adjusted earnings came in at $1.97 per share, which beat the consensus mark by a penny. However, the bottom line was flat with the prior-year quarter figure. Meanwhile, foreign currency translation had a negative impact of 2 cents per share on earnings in the quarter under review.

Revenues & Comps Discussion

In the fourth quarter, revenues of $5,349 million beat the Zacks Consensus Estimate of $5,300 million. Moreover, the figure improved 4% year over year. This uptrend can primarily be attributed to increase in revenues from franchised restaurants. Moreover, on a constant-currency basis, the top line improved 4% on a year-over-year basis.

At company-operated restaurants, revenues came in at $2,363.3 million, almost flat year over year. However, the same at franchise-operated restaurants improved 7% to $2,985.7 million.

Global comps improved 5.9% driven by positive comparable sales across all segments. Notably, this marked the 18th consecutive quarter of positive comparable sales. In third-quarter 2019, comps were also up 5.9%. Notably, the company recorded highest global same-store sales growth in a decade.

Solid Comps Across Segments

U.S.: Comps at this segment grew 5% in the fourth quarter, higher than a 4.8% rise in the prior quarter. Deployment of Experience of the Future and strength in core menu items and successful national and local deal offerings drove the segment’s comps.

International Operated Markets: Comps at this segment rose 6.1% year over year, higher than prior-quarter’s rise of 5.6%.

International Developmental Licensed Segment: The segment’s comparable sales increased 7.2% in the fourth quarter. In the preceding quarter, the segment’s comps had risen 8.1%.

McDonald's Corporation Price, Consensus and EPS Surprise

Other Information

McDonald's returned $2.3 billion to shareholders via stock repurchase and dividends. In 2019, the company had returned $8.6 billion to shareholders via stock repurchase and dividends. The company has returned $25 billion for the three-year period ending 2019.

Cash and cash equivalents at the end of 2019 was $898.5 million, compared with $866 million at the end of 2019. Long-term debt as of Dec 31, 2019 was $34,118.1 million, compared with $31,075.3 million at the end of 2018.

2019 Highlights

Full-year adjusted earnings came in at $7.84 per share, reflecting a decline of 1% from 2018. Foreign currency headwinds had a negative impact of 21 cents in 2019. Revenues improved 0.2% in 2019 to $21,076.5 million.

Zacks Rank & Key Picks

McDonald's carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the same space include Domino's Pizza, Inc. (DPZ - Free Report) , Dunkin' Brands Group, Inc. (DNKN - Free Report) and Dave & Buster's Entertainment, Inc. (PLAY - Free Report) . All these stocks carry the Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Domino's Pizza, Dunkin' Brands and Dave & Buster's Entertainment have an impressive long-term earnings growth rate of 13.7%,10.9% and 14.8%, respectively.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.      

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.   

See the pot trades we're targeting>>