/McDonald)
Based in Chicago, Illinois, McDonald's Corporation (MCD) mainly operates and franchises quick-service restaurants under the McDonald's brand. Valued at a market cap of $225.5 billion, the company is best known for its burgers, fries, sandwiches, shakes and its unique value meals. The fast food giant is expected to announce its fiscal Q3 earnings results before the market opens on Tuesday, Oct. 29.
Ahead of this event, analysts project the company to report a profit of $3.15 per share, down 1.3% from $3.19 per share in the year-ago quarter. The company has surpassed Wall Street's bottom-line estimates in two of the last four quarters, while missing on other two occasions.
In Q2, the company reported an adjusted EPS of $2.97, which declined 6% from the year-ago quarter and missed the consensus estimates by 3.6%. The weaker-than-expected performance was primarily driven by a 1% decline in global comparable sales for the first time after increasing in 13 straight quarters.
For fiscal 2024, analysts expect MCD to report an EPS of $11.71, down 1.9% from $11.94 in fiscal 2023. Nevertheless, over the longer term, the bottom line is expected to grow 7.4% year-over-year to $12.58 per share in fiscal 2025.
Shares of MCD have gained 5.5% on a YTD basis, lagging behind both the S&P 500 Index's ($SPX) 22.5% surge and the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 11.6% return over the same period.
MCD’s underperformance can be attributed to its declining comparable store sales significantly in France and China and ongoing conflict in the Middle East, offsetting the positive sales in regions like Latin America and Japan. Moreover, macroeconomic headwinds like cautious consumer spending and inflation have also impacted its performance.
However, on July 29, shares of McDonald's jumped 3.7% despite reporting a weaker-than-expected Q2 performance. Along with its earnings, its revenue of $6.49 billion missed the consensus estimates of $6.65 billion.
Analysts' consensus view on McDonald's stock is moderately optimistic, with a "Moderate Buy" rating overall. Among 33 analysts covering the stock, 19 recommend a "Strong Buy," two suggest a "Moderate Buy," and 12 advise a “Hold.”
MCD is trading above its mean price target of $312.77.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
