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McDonald's (MCD) to Report Q3 Earnings: What's in Store?
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McDonald's Corporation (MCD - Free Report) is scheduled to report third-quarter 2020 results on Nov 9, before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 13.2%.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.93 per share. Notably, the company reported an earnings of $2.11 in the year-ago quarter. The consensus mark for revenues stands at $5.36 billion, suggesting a decline of 1.4% from the prior-year quarter.
Factors to Note
McDonald's third-quarter results are likely to reflect the impact of the coronavirus pandemic. Dismal store traffic might have impacted the company’s performance in the quarter to be reported. Moreover, decline in franchise revenues is likely to have affected the third-quarter performance. Notably, the Zacks Consensus Estimate for revenues at franchise-operated restaurants stands at $2,945 million, indicating a decline of 2.9% from the prior-year quarter.
However, strong digitalization is likely to have benefited performance in the quarter under review. The company has been focusing on drive-thru, delivery & take-away amid the coronavirus pandemic. Prior to the coronavirus outbreak, drive-thru accounted for about two-thirds of all sales in the United States. Drive-thru now accounts for approximately 90% of sales.
In the last month, the company provided third-quarter 2020 business update. During the third quarter of 2020, comparable sales in the U.S. segment improved 4.6% year over year compared with 4.8% growth reported in the prior-year quarter. In second-quarter 2020, comparable sales in the U.S. segment declined 8.7%. Notably, the segment’s comparable sales witnessed sequential improvement throughout the third quarter on the back of strong average check growth and dinner performance. Moreover, the company witnessed low-double-digit comparable sales in September due to its marketing investments and related promotional activities.
During the third quarter, comparable sales in the International Operated Markets segment were down 4.4% against growth of 5.6% in the prior-year quarter. Notably, the segment witnessed negative comparable sales in France, Spain, Germany and the U.K., partly offset by positive comparable sales in Australia. Although government regulations have negatively impacted recovery, the segment witnessed sequential improvement throughout the third quarter on the back of positive consumer sentiments.
Our proven model conclusively predicts 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 chances of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other stocks from the Restaurant space that investors may consider as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming releases:
Jack in the Box Inc. (JACK - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.95%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chuy's Holdings, Inc. (CHUY - Free Report) currently has a Zacks Rank #2 and an Earnings ESP of +35.62%.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
Image: Bigstock
McDonald's (MCD) to Report Q3 Earnings: What's in Store?
McDonald's Corporation (MCD - Free Report) is scheduled to report third-quarter 2020 results on Nov 9, before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 13.2%.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.93 per share. Notably, the company reported an earnings of $2.11 in the year-ago quarter. The consensus mark for revenues stands at $5.36 billion, suggesting a decline of 1.4% from the prior-year quarter.
Factors to Note
McDonald's third-quarter results are likely to reflect the impact of the coronavirus pandemic. Dismal store traffic might have impacted the company’s performance in the quarter to be reported. Moreover, decline in franchise revenues is likely to have affected the third-quarter performance. Notably, the Zacks Consensus Estimate for revenues at franchise-operated restaurants stands at $2,945 million, indicating a decline of 2.9% from the prior-year quarter.
However, strong digitalization is likely to have benefited performance in the quarter under review. The company has been focusing on drive-thru, delivery & take-away amid the coronavirus pandemic. Prior to the coronavirus outbreak, drive-thru accounted for about two-thirds of all sales in the United States. Drive-thru now accounts for approximately 90% of sales.
In the last month, the company provided third-quarter 2020 business update. During the third quarter of 2020, comparable sales in the U.S. segment improved 4.6% year over year compared with 4.8% growth reported in the prior-year quarter. In second-quarter 2020, comparable sales in the U.S. segment declined 8.7%. Notably, the segment’s comparable sales witnessed sequential improvement throughout the third quarter on the back of strong average check growth and dinner performance. Moreover, the company witnessed low-double-digit comparable sales in September due to its marketing investments and related promotional activities.
During the third quarter, comparable sales in the International Operated Markets segment were down 4.4% against growth of 5.6% in the prior-year quarter. Notably, the segment witnessed negative comparable sales in France, Spain, Germany and the U.K., partly offset by positive comparable sales in Australia. Although government regulations have negatively impacted recovery, the segment witnessed sequential improvement throughout the third quarter on the back of positive consumer sentiments.
McDonalds Corporation Price and EPS Surprise
McDonalds Corporation price-eps-surprise | McDonalds Corporation Quote
What the Zacks Model Unveils
Our proven model conclusively predicts 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 chances of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
McDonald's, which shares space with Starbucks Corporation (SBUX - Free Report) , has an Earnings ESP of +0.70% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With Favorable Combination
Here are some other stocks from the Restaurant space that investors may consider as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming releases:
Jack in the Box Inc. (JACK - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.95%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chuy's Holdings, Inc. (CHUY - Free Report) currently has a Zacks Rank #2 and an Earnings ESP of +35.62%.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
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