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McDonald's (MCD) Up 2.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for McDonald's (MCD - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is McDonald's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
McDonald's Q4 Earnings Beat Estimates, Revenues Lag
McDonald's reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.
Chris Kempczinski, president and CEO of McDonald's, attributed the performance to the effective implementation of the Accelerating the Arches strategy. The initiative paved a path for a cumulative comparable sales growth of over 30% from 2019 levels. The management stated optimism in the company’s resiliency in the face of predicted macroeconomic challenges in 2024.
Earnings & Revenue Discussion
During fourth-quarter 2023, McDonald's reported adjusted earnings per share (EPS) of $2.95, outpacing the Zacks Consensus Estimate of $2.81. Adjusted earnings increased 11% from the prior-year quarter’s figure.
Quarterly net revenues of $6.4 billion missed the consensus mark of $6.5 billion. The top line rose 8% year over year.
At company-operated restaurants, sales were $2.5 billion, up 12% year over year. Sales at franchise-operated restaurants amounted to $3.9 billion and increased 6% year over year. Other revenues fell 13% year over year to $63.5 million. Our model predicted sales by company-operated and franchise-operated restaurants to rise 18% and 4.1% year over year, respectively.
Comps Details
In the quarter under discussion, global comps expanded by 3.4% compared with 12.6% in the prior-year quarter. Our estimate was 3.3%.
Strong Comps Across Segments
U.S.: During the fourth quarter, segmental comps rose 4.3% year over year compared with 10.3% a year ago. Comps benefited from a menu price increase, effective marketing campaigns and continued digital and delivery growth. Our model estimated U.S. comps to climb 3.8%.
International Operated Markets: Segmental comps extended 4.4% year over year compared with 12.6% in the year-ago quarter. Strong comparable sales in Canada, Germany and the U.K. resulted in the uptick. We anticipated a 3.3% year-over-year rise.
International Developmental Licensed Segment: Segmental comparable sales registered a 0.7% gain year over year compared with 16.5% in the prior-year quarter. McDonald's benefited from robust comps in all geographic locations (excluding the Middle East). Our model anticipated the metric to inch up 1.8% year over year.
Operating Highlights & Expenses
During the fourth quarter, McDonald’s total operating costs and expenses were $3.6 billion, up 8% year over year.
Operating income rose 8% year over year to $2.8 billion. Net income totaled $2 billion, up 7% year over year.
Balance Sheet
As of Dec 31, 2023, cash and equivalents came in at $4.6 billion compared with $2.6 billion as of Dec 31, 2022.
Long-term debt as of Dec 31, 2023, was $37.2 billion compared with $35.9 billion as of Dec 31, 2022.
2023 Highlights
Total revenues in 2023 amounted to $25.5 billion compared with $23.2 billion in 2022.
Net Income in 2023 came in at $8.5 billion compared with $6.2 billion reported in 2022.
In 2023, diluted EPS came in at $11.94 compared with $10.10 reported in the previous year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, McDonald's has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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.
Performance of an Industry Player
McDonald's is part of the Zacks Retail - Restaurants industry. Over the past month, Brinker International (EAT - Free Report) , a stock from the same industry, has gained 7%. The company reported its results for the quarter ended December 2023 more than a month ago.
Brinker International reported revenues of $1.07 billion in the last reported quarter, representing a year-over-year change of +5.4%. EPS of $0.99 for the same period compares with $0.76 a year ago.
For the current quarter, Brinker International is expected to post earnings of $1.13 per share, indicating a change of -8.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Brinker International. Also, the stock has a VGM Score of B.
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McDonald's (MCD) Up 2.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for McDonald's (MCD - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is McDonald's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
McDonald's Q4 Earnings Beat Estimates, Revenues Lag
McDonald's reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.
Chris Kempczinski, president and CEO of McDonald's, attributed the performance to the effective implementation of the Accelerating the Arches strategy. The initiative paved a path for a cumulative comparable sales growth of over 30% from 2019 levels. The management stated optimism in the company’s resiliency in the face of predicted macroeconomic challenges in 2024.
Earnings & Revenue Discussion
During fourth-quarter 2023, McDonald's reported adjusted earnings per share (EPS) of $2.95, outpacing the Zacks Consensus Estimate of $2.81. Adjusted earnings increased 11% from the prior-year quarter’s figure.
Quarterly net revenues of $6.4 billion missed the consensus mark of $6.5 billion. The top line rose 8% year over year.
At company-operated restaurants, sales were $2.5 billion, up 12% year over year. Sales at franchise-operated restaurants amounted to $3.9 billion and increased 6% year over year. Other revenues fell 13% year over year to $63.5 million. Our model predicted sales by company-operated and franchise-operated restaurants to rise 18% and 4.1% year over year, respectively.
Comps Details
In the quarter under discussion, global comps expanded by 3.4% compared with 12.6% in the prior-year quarter. Our estimate was 3.3%.
Strong Comps Across Segments
U.S.: During the fourth quarter, segmental comps rose 4.3% year over year compared with 10.3% a year ago. Comps benefited from a menu price increase, effective marketing campaigns and continued digital and delivery growth. Our model estimated U.S. comps to climb 3.8%.
International Operated Markets: Segmental comps extended 4.4% year over year compared with 12.6% in the year-ago quarter. Strong comparable sales in Canada, Germany and the U.K. resulted in the uptick. We anticipated a 3.3% year-over-year rise.
International Developmental Licensed Segment: Segmental comparable sales registered a 0.7% gain year over year compared with 16.5% in the prior-year quarter. McDonald's benefited from robust comps in all geographic locations (excluding the Middle East). Our model anticipated the metric to inch up 1.8% year over year.
Operating Highlights & Expenses
During the fourth quarter, McDonald’s total operating costs and expenses were $3.6 billion, up 8% year over year.
Operating income rose 8% year over year to $2.8 billion. Net income totaled $2 billion, up 7% year over year.
Balance Sheet
As of Dec 31, 2023, cash and equivalents came in at $4.6 billion compared with $2.6 billion as of Dec 31, 2022.
Long-term debt as of Dec 31, 2023, was $37.2 billion compared with $35.9 billion as of Dec 31, 2022.
2023 Highlights
Total revenues in 2023 amounted to $25.5 billion compared with $23.2 billion in 2022.
Net Income in 2023 came in at $8.5 billion compared with $6.2 billion reported in 2022.
In 2023, diluted EPS came in at $11.94 compared with $10.10 reported in the previous year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, McDonald's has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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.
Performance of an Industry Player
McDonald's is part of the Zacks Retail - Restaurants industry. Over the past month, Brinker International (EAT - Free Report) , a stock from the same industry, has gained 7%. The company reported its results for the quarter ended December 2023 more than a month ago.
Brinker International reported revenues of $1.07 billion in the last reported quarter, representing a year-over-year change of +5.4%. EPS of $0.99 for the same period compares with $0.76 a year ago.
For the current quarter, Brinker International is expected to post earnings of $1.13 per share, indicating a change of -8.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Brinker International. Also, the stock has a VGM Score of B.