We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
McDonald's (MCD) Down 2.3% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for McDonald's (MCD - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is McDonald's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
McDonald’s Stock Up on Q3 Earnings & Revenues Beat
McDonald's reported third-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The bottom line beat the consensus estimate after missing the same in the trailing two quarters.
Robust drive-thru presence and its investments in delivery and digital over the past few years have aided the company amid the ongoing crisis. All of the company’s restaurants remain opened throughout the quarter under review. However, resurgence in coronavirus cases has resulted in limited dine-in capacity and operating hours in most of the countries.
The company reported adjusted earnings of $2.22 per share, which beat the Zacks Consensus Estimate of $1.93. Moreover, the bottom line improved 5% year over year. Meanwhile, foreign currency translation had a negative impact of 3 cents per share on earnings in the quarter under review.
Revenues & Comps Discussion
In the third quarter, revenues of $5,418.1 million surpassed the Zacks Consensus Estimate of $5,365 million. However, the figure declined 2% year over year. This downtrend can primarily be attributed to the coronavirus pandemic. Moreover, on a constant-currency basis, the top line decreased 2% year over year.
At company-operated restaurants, revenues were $2,286.4 million, down 5% year over year. Moreover, the same at franchise-operated restaurants inched up 1% to $3,044.8 million.
In the quarter global comps declined 2.2%, against growth of 5.9% in the prior-year quarter. Comps declined for the third straight quarter after reporting positive comps in the trailing 19 quarters. In second-quarter 2020, comps were down 23.9%.
Solid Comps Across Segments
U.S.: Comps at this segment rose 4.6% in the third quarter, compared with a gain of 4.8% in the prior-year quarter. The company’s comps in the quarter benefited from robust average check growth and strong performance at the dinner daypart.
International Operated Markets: Comps at this segment declined 4.4% year over year, against a gain of 5.6% in the year-ago quarter. Comps were hurt by dismal comps particularly in France, Spain, Germany and the U.K. However, the company witnessed positive comps in Australia during the quarter under review aided by drive-thru performance.
International Developmental Licensed Segment: The segment’s comparable sales decreased 10.1% in the third quarter. In the prior-year quarter, the segment’s comps had risen 5.9%. Comps were negatively impacted by dismal comps in Latin America and China, which was marginally offset by robust comps in Japan.
Other Financial Information
The company ended the quarter with cash and cash equivalent of $3,683.8 million, compared with $898.5 million at the end of Dec 312, 2019. As of Sep 30, 2020, long-term debt stood at $35,143.4 million, compared with $34,118.1 at the end of Dec 31, 2019.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -7.23% due to these changes.
VGM Scores
Currently, 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 C. 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
McDonald's (MCD) Down 2.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for McDonald's (MCD - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is McDonald's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
McDonald’s Stock Up on Q3 Earnings & Revenues Beat
McDonald's reported third-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The bottom line beat the consensus estimate after missing the same in the trailing two quarters.
Robust drive-thru presence and its investments in delivery and digital over the past few years have aided the company amid the ongoing crisis. All of the company’s restaurants remain opened throughout the quarter under review. However, resurgence in coronavirus cases has resulted in limited dine-in capacity and operating hours in most of the countries.
The company reported adjusted earnings of $2.22 per share, which beat the Zacks Consensus Estimate of $1.93. Moreover, the bottom line improved 5% year over year. Meanwhile, foreign currency translation had a negative impact of 3 cents per share on earnings in the quarter under review.
Revenues & Comps Discussion
In the third quarter, revenues of $5,418.1 million surpassed the Zacks Consensus Estimate of $5,365 million. However, the figure declined 2% year over year. This downtrend can primarily be attributed to the coronavirus pandemic. Moreover, on a constant-currency basis, the top line decreased 2% year over year.
At company-operated restaurants, revenues were $2,286.4 million, down 5% year over year. Moreover, the same at franchise-operated restaurants inched up 1% to $3,044.8 million.
In the quarter global comps declined 2.2%, against growth of 5.9% in the prior-year quarter. Comps declined for the third straight quarter after reporting positive comps in the trailing 19 quarters. In second-quarter 2020, comps were down 23.9%.
Solid Comps Across Segments
U.S.: Comps at this segment rose 4.6% in the third quarter, compared with a gain of 4.8% in the prior-year quarter. The company’s comps in the quarter benefited from robust average check growth and strong performance at the dinner daypart.
International Operated Markets: Comps at this segment declined 4.4% year over year, against a gain of 5.6% in the year-ago quarter. Comps were hurt by dismal comps particularly in France, Spain, Germany and the U.K. However, the company witnessed positive comps in Australia during the quarter under review aided by drive-thru performance.
International Developmental Licensed Segment: The segment’s comparable sales decreased 10.1% in the third quarter. In the prior-year quarter, the segment’s comps had risen 5.9%. Comps were negatively impacted by dismal comps in Latin America and China, which was marginally offset by robust comps in Japan.
Other Financial Information
The company ended the quarter with cash and cash equivalent of $3,683.8 million, compared with $898.5 million at the end of Dec 312, 2019. As of Sep 30, 2020, long-term debt stood at $35,143.4 million, compared with $34,118.1 at the end of Dec 31, 2019.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -7.23% due to these changes.
VGM Scores
Currently, 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 C. 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.