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McDonald's (MCD) Gears up for Q4 Earnings: What's in Store?
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McDonald's Corporation (MCD - Free Report) is scheduled to report fourth-quarter 2023 results on Feb 5, before the opening bell. In the last reported quarter, the company delivered earnings surprise of 6.3%.
How Are Estimates Placed?
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $2.81 per share, indicating growth of 8.5% from $2.59 reported in the year-ago quarter. For revenues, the consensus mark is pegged at $6.47 billion. The metric suggests growth of 9.2% from the year-ago quarter’s figure.
Let's take a look at how things have shaped up in the quarter under review.
Factors at Play
McDonald's fourth-quarter 2023 results are likely to benefit from strong comparable sales growth, innovative menu additions, expansion initiatives, increased average check value and menu price adjustments. Our model predicts the company’s U.S and international comps in the fourth quarter to witness growth of 3.8% and 3.3% from the year-ago levels, respectively.
We expect total U.S. company-operated sales in fourth-quarter 2023 to be up nearly 3.7% from the prior-year levels to $807.3 million. Moreover, we forecast international operated markets revenues to gain 26.4% from the year-earlier levels to $1,586.1 million.
McDonald's has been proactively improving its operations in Australia, Canada, France, Germany and the U.K. with the goal of increasing comparable sales. The company is achieving this by introducing value meals, customizing menus to suit local preferences, renovating restaurants, executing impactful marketing strategies and promotions, elevating service quality, and offering enhanced convenience through strengthened digital presence and delivery services. These initiatives are expected to have positively impacted the company's performance in the fourth quarter of 2023.
However, fourth-quarter margins might have suffered due to continued pressure from elevated commodities and wages. Our model predicts adjusted operating margin in fourth-quarter 2023 to be 43.5% compared with 43.6% in the prior-year quarter. A challenging macro environment, including rising interest rates, remains a headwind.
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 +0.16% and a Zacks Rank #3.
Stocks to Consider
Here are some other stocks worth considering from the Zacks Retail-Wholesale space, as our model shows that these have the right combination of elements to beat on earnings this season.
CMG’s earnings for the quarter under review are expected to increase 17.1%. It reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 5.8%.
Darden Restaurants, Inc. (DRI - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank of 2.
DRI is expected to register 12.8% growth in earnings for the quarter to be reported. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 4.2%.
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank of 3.
JACK’s earnings for the to-be-reported quarter are expected to decline 3%. It reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 10.1%.
Image: Bigstock
McDonald's (MCD) Gears up for Q4 Earnings: What's in Store?
McDonald's Corporation (MCD - Free Report) is scheduled to report fourth-quarter 2023 results on Feb 5, before the opening bell. In the last reported quarter, the company delivered earnings surprise of 6.3%.
How Are Estimates Placed?
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $2.81 per share, indicating growth of 8.5% from $2.59 reported in the year-ago quarter. For revenues, the consensus mark is pegged at $6.47 billion. The metric suggests growth of 9.2% from the year-ago quarter’s figure.
Let's take a look at how things have shaped up in the quarter under review.
Factors at Play
McDonald's fourth-quarter 2023 results are likely to benefit from strong comparable sales growth, innovative menu additions, expansion initiatives, increased average check value and menu price adjustments. Our model predicts the company’s U.S and international comps in the fourth quarter to witness growth of 3.8% and 3.3% from the year-ago levels, respectively.
We expect total U.S. company-operated sales in fourth-quarter 2023 to be up nearly 3.7% from the prior-year levels to $807.3 million. Moreover, we forecast international operated markets revenues to gain 26.4% from the year-earlier levels to $1,586.1 million.
McDonald's has been proactively improving its operations in Australia, Canada, France, Germany and the U.K. with the goal of increasing comparable sales. The company is achieving this by introducing value meals, customizing menus to suit local preferences, renovating restaurants, executing impactful marketing strategies and promotions, elevating service quality, and offering enhanced convenience through strengthened digital presence and delivery services. These initiatives are expected to have positively impacted the company's performance in the fourth quarter of 2023.
However, fourth-quarter margins might have suffered due to continued pressure from elevated commodities and wages. Our model predicts adjusted operating margin in fourth-quarter 2023 to be 43.5% compared with 43.6% in the prior-year quarter. A challenging macro environment, including rising interest rates, remains a headwind.
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 +0.16% and a Zacks Rank #3.
Stocks to Consider
Here are some other stocks worth considering from the Zacks Retail-Wholesale space, as our model shows that these have the right combination of elements to beat on earnings this season.
Chipotle Mexican Grill, Inc. (CMG - Free Report) has an Earnings ESP of +1.30% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
CMG’s earnings for the quarter under review are expected to increase 17.1%. It reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 5.8%.
Darden Restaurants, Inc. (DRI - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank of 2.
DRI is expected to register 12.8% growth in earnings for the quarter to be reported. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 4.2%.
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank of 3.
JACK’s earnings for the to-be-reported quarter are expected to decline 3%. It reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 10.1%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.