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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 2023 results on Oct 30, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 14.4%.
How are Estimates Placed?
The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.99 per share, indicating growth of 11.6% from $2.68 in the year-ago quarter. For revenues, the consensus mark is pegged at $6.57 billion. The metric suggests an improvement of 11.8% from the year-ago quarter’s figure.
Let's look at how things have shaped up in the quarter.
Factors at Play
McDonald's is expected to report impressive third-quarter results, thanks to strong comparable sales growth, innovative menu additions, expansion initiatives, increased average check value and menu price adjustments. Focus on digitalization is also playing a pivotal role in driving overall growth. Our model predicts MCD’s U.S. and international comps in the third quarter to witness gains of 9.8% and 9% year over year, respectively.
MCD is actively enhancing its operations in Australia, Canada, France, Germany and the U.K. It aims to boost comparable sales in these regions by introducing value meals, tailoring the menu to local preferences, revamping restaurants, implementing effective marketing and promotions, and enhancing service quality. It also plans to provide greater convenience through delivery services and a strengthened digital presence. These efforts are likely to have aided the company’s third-quarter performance.
We expect total U.S. company-operated sales in third-quarter 2023 to be up nearly 12.1% year over year to $800 million. Further, we predict international operated markets revenues to gain 7.3% year over year to $1,309.1 million.
However, margins in the third quarter might have suffered due to continued pressure from elevated commodities and wages. A challenging macro environment including rising interest rates remains headwinds. The company expects to witness inflation in 2023 between mid-to-high single digits. Our model forecasts adjusted operating margin in third-quarter 2023 to be 46.6% compared with 47.1% in the prior-year quarter.
Our proven model 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 has an Earnings ESP of +1.16% and a Zacks Rank #3.
Other Stocks to Consider
Here are some other stocks from the Zacks Retail - Restaurants industry that investors may consider as our model shows that these too have the right combination of elements to post an earnings beat this season.
Shares of SBUX have gained 12.5% in the past year. SBUX’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 7.31%.
Yum! Brands, Inc. (YUM - Free Report) has an Earnings ESP of +2.73% and a Zacks Rank #3.
The stock has increased 9.2% in the past year. YUM’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 2%.
Restaurant Brands International Inc. (QSR - Free Report) has an Earnings ESP of +0.01% and a Zacks Rank #3.
The stock has jumped 15.1% in the past year. QSR’s earnings beat estimates in each of the trailing four quarters, the average surprise being 12.7%.
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 2023 results on Oct 30, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 14.4%.
How are Estimates Placed?
The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.99 per share, indicating growth of 11.6% from $2.68 in the year-ago quarter. For revenues, the consensus mark is pegged at $6.57 billion. The metric suggests an improvement of 11.8% from the year-ago quarter’s figure.
Let's look at how things have shaped up in the quarter.
Factors at Play
McDonald's is expected to report impressive third-quarter results, thanks to strong comparable sales growth, innovative menu additions, expansion initiatives, increased average check value and menu price adjustments. Focus on digitalization is also playing a pivotal role in driving overall growth. Our model predicts MCD’s U.S. and international comps in the third quarter to witness gains of 9.8% and 9% year over year, respectively.
MCD is actively enhancing its operations in Australia, Canada, France, Germany and the U.K. It aims to boost comparable sales in these regions by introducing value meals, tailoring the menu to local preferences, revamping restaurants, implementing effective marketing and promotions, and enhancing service quality. It also plans to provide greater convenience through delivery services and a strengthened digital presence. These efforts are likely to have aided the company’s third-quarter performance.
We expect total U.S. company-operated sales in third-quarter 2023 to be up nearly 12.1% year over year to $800 million. Further, we predict international operated markets revenues to gain 7.3% year over year to $1,309.1 million.
However, margins in the third quarter might have suffered due to continued pressure from elevated commodities and wages. A challenging macro environment including rising interest rates remains headwinds. The company expects to witness inflation in 2023 between mid-to-high single digits. Our model forecasts adjusted operating margin in third-quarter 2023 to be 46.6% compared with 47.1% in the prior-year quarter.
McDonald's Corporation Price and EPS Surprise
McDonald's Corporation price-eps-surprise | McDonald's Corporation Quote
What the Zacks Model Unveils
Our proven model 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 has an Earnings ESP of +1.16% and a Zacks Rank #3.
Other Stocks to Consider
Here are some other stocks from the Zacks Retail - Restaurants industry that investors may consider as our model shows that these too have the right combination of elements to post an earnings beat this season.
Starbucks Corporation (SBUX - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of SBUX have gained 12.5% in the past year. SBUX’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 7.31%.
Yum! Brands, Inc. (YUM - Free Report) has an Earnings ESP of +2.73% and a Zacks Rank #3.
The stock has increased 9.2% in the past year. YUM’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 2%.
Restaurant Brands International Inc. (QSR - Free Report) has an Earnings ESP of +0.01% and a Zacks Rank #3.
The stock has jumped 15.1% in the past year. QSR’s earnings beat estimates in each of the trailing four quarters, the average surprise being 12.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.