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McDonald's (MCD) Q2 Earnings and Revenues Lag Estimates
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McDonald's Corporation (MCD - Free Report) reported second-quarter 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and bottom lines decreased on a year-over-year basis.
Chairman and CEO Chris Kempczinski expressed strong belief in the company's "Accelerating the Arches" strategy, emphasizing its suitability for the business. Kempczinski noted that as consumers become more selective with their spending, the company remains dedicated to consistently delivering dependable value. Additionally, MCD is committed to driving strategic growth in areas such as its chicken offerings and loyalty programs.
Earnings & Revenue Discussion
In second-quarter 2024, McDonald's reported adjusted earnings per share (EPS) of $2.97, missing the Zacks Consensus Estimate of $3.08. Moreover, adjusted earnings decreased 6% year over year.
Quarterly net revenues of $6,490 million lagged the consensus mark of $6,651 million. The top line declined 0.1% year over year.
At company-operated restaurants, sales were $2.46 billion, down 1% year over year. Sales at franchise-operated restaurants amounted to $3.94 billion, which increased 0.2% year over year. Other revenues rose 16% year over year to $89 million. Our model predicted sales by company-operated and franchise-operated restaurants to rise 5.3% and 1.6% from the prior-year levels, respectively.
McDonald's Corporation Price, Consensus and EPS Surprise
In the quarter under discussion, global comps declined 1% against 11.7% growth in the prior-year quarter. Our estimate was 1.8% growth year over year. The company’s comps decreased for the first time after increasing in thirteen straight quarters.
Comps Across Segments
United States.: In the second quarter, segmental comps dropped 0.7% against 10.3% growth of the prior year. Comparable sales were influenced by a decline in guest counts, though this was somewhat balanced by higher average checks thanks to strategic menu price increases. Effective execution at the restaurant level, along with ongoing growth in digital orders and delivery services, also contributed positively to the overall results. Our model estimated the U.S. comps to increase 0.3%.
International Operated Markets: Segmental comps decreased 1.1% against 11.9% growth in the year-ago quarter. The performance of the segment was affected by declining comparable sales in several markets, with France being a significant contributor to this downturn. We anticipated a rise of 3.3% from the year-ago levels.
International Developmental Licensed Segment: Segmental comparable sales registered a 1.3% decline against 14% growth in the prior-year quarter. The ongoing conflict in the Middle East and declining comparable sales in China outweighed the positive sales performance in Latin America and Japan.
Operating Highlights & Expenses
In the second quarter, McDonald’s total operating costs and expenses were $3.57 billion, up 5% year over year.
Operating income dropped 6% year over year to $2.92 billion. Net income totaled $2.02 billion, down 12% year over year.
It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have surged 60.5% in the past year. The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5.4% and 46.6% growth, respectively, from year-earlier actuals.
Texas Roadhouse, Inc. (TXRH - Free Report) currently carries a Zacks Rank #2 (Buy). TXRH has a long-term earnings growth rate of 17.2%. Shares of TXRH have gained 47% in the past year.
The Zacks Consensus Estimate for TXRH’s 2024 sales and EPS indicates a rise of 15.3% and 33.7%, respectively, from the year-ago period’s levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2 at present. LOCO has a trailing four-quarter earnings surprise of 19.4%, on average. The stock has moved up 12% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS suggests growth of 3.8% and 9.9%, respectively, from the year-ago period’s levels.
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McDonald's (MCD) Q2 Earnings and Revenues Lag Estimates
McDonald's Corporation (MCD - Free Report) reported second-quarter 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and bottom lines decreased on a year-over-year basis.
Chairman and CEO Chris Kempczinski expressed strong belief in the company's "Accelerating the Arches" strategy, emphasizing its suitability for the business. Kempczinski noted that as consumers become more selective with their spending, the company remains dedicated to consistently delivering dependable value. Additionally, MCD is committed to driving strategic growth in areas such as its chicken offerings and loyalty programs.
Earnings & Revenue Discussion
In second-quarter 2024, McDonald's reported adjusted earnings per share (EPS) of $2.97, missing the Zacks Consensus Estimate of $3.08. Moreover, adjusted earnings decreased 6% year over year.
Quarterly net revenues of $6,490 million lagged the consensus mark of $6,651 million. The top line declined 0.1% year over year.
At company-operated restaurants, sales were $2.46 billion, down 1% year over year. Sales at franchise-operated restaurants amounted to $3.94 billion, which increased 0.2% year over year. Other revenues rose 16% year over year to $89 million. Our model predicted sales by company-operated and franchise-operated restaurants to rise 5.3% and 1.6% from the prior-year levels, respectively.
McDonald's Corporation Price, Consensus and EPS Surprise
McDonald's Corporation price-consensus-eps-surprise-chart | McDonald's Corporation Quote
Comps Details
In the quarter under discussion, global comps declined 1% against 11.7% growth in the prior-year quarter. Our estimate was 1.8% growth year over year. The company’s comps decreased for the first time after increasing in thirteen straight quarters.
Comps Across Segments
United States.: In the second quarter, segmental comps dropped 0.7% against 10.3% growth of the prior year. Comparable sales were influenced by a decline in guest counts, though this was somewhat balanced by higher average checks thanks to strategic menu price increases. Effective execution at the restaurant level, along with ongoing growth in digital orders and delivery services, also contributed positively to the overall results. Our model estimated the U.S. comps to increase 0.3%.
International Operated Markets: Segmental comps decreased 1.1% against 11.9% growth in the year-ago quarter. The performance of the segment was affected by declining comparable sales in several markets, with France being a significant contributor to this downturn. We anticipated a rise of 3.3% from the year-ago levels.
International Developmental Licensed Segment: Segmental comparable sales registered a 1.3% decline against 14% growth in the prior-year quarter. The ongoing conflict in the Middle East and declining comparable sales in China outweighed the positive sales performance in Latin America and Japan.
Operating Highlights & Expenses
In the second quarter, McDonald’s total operating costs and expenses were $3.57 billion, up 5% year over year.
Operating income dropped 6% year over year to $2.92 billion. Net income totaled $2.02 billion, down 12% year over year.
Zacks Rank & Key Picks
MCD currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail – Restaurants industry are:
Brinker International, Inc. (EAT - Free Report) flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have surged 60.5% in the past year. The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5.4% and 46.6% growth, respectively, from year-earlier actuals.
Texas Roadhouse, Inc. (TXRH - Free Report) currently carries a Zacks Rank #2 (Buy). TXRH has a long-term earnings growth rate of 17.2%. Shares of TXRH have gained 47% in the past year.
The Zacks Consensus Estimate for TXRH’s 2024 sales and EPS indicates a rise of 15.3% and 33.7%, respectively, from the year-ago period’s levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2 at present. LOCO has a trailing four-quarter earnings surprise of 19.4%, on average. The stock has moved up 12% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS suggests growth of 3.8% and 9.9%, respectively, from the year-ago period’s levels.