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Why Is McDonald's (MCD) Down 7% Since Last Earnings Report?
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It has been about a month since the last earnings report for McDonald's (MCD - Free Report) . Shares have lost about 7% in that time frame, outperforming 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 catalysts.
McDonald's Earnings & Revenues Top Estimates in Q4
McDonald's reported fourth-quarter 2019 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate after missing the same in the preceding quarter.
Adjusted earnings came in at $1.97 per share, which beat the consensus mark by a penny. However, the bottom line was flat with the prior-year quarter figure. Meanwhile, foreign currency translation had a negative impact of 2 cents per share on earnings in the quarter under review.
Revenues & Comps Discussion
In the fourth quarter, revenues of $5,349 million beat the Zacks Consensus Estimate of $5,300 million. Moreover, the figure improved 4% year over year. This uptrend can primarily be attributed to increase in revenues from franchised restaurants. Moreover, on a constant-currency basis, the top line improved 4% on a year-over-year basis.
At company-operated restaurants, revenues came in at $2,363.3 million, almost flat year over year. However, the same at franchise-operated restaurants improved 7% to $2,985.7 million.
Global comps improved 5.9% driven by positive comparable sales across all segments. Notably, this marked the 18th consecutive quarter of positive comparable sales. In third-quarter 2019, comps were also up 5.9%. Notably, the company recorded highest global same-store sales growth in a decade.
Solid Comps Across Segments
U.S.: Comps at this segment grew 5% in the fourth quarter, higher than a 4.8% rise in the prior quarter. Deployment of Experience of the Future and strength in core menu items and successful national and local deal offerings drove the segment’s comps.
International Operated Markets: Comps at this segment rose 6.1% year over year, higher than prior-quarter’s rise of 5.6%.
International Developmental Licensed Segment: The segment’s comparable sales increased 7.2% in the fourth quarter. In the preceding quarter, the segment’s comps had risen 8.1%.
Other Information
McDonald's returned $2.3 billion to shareholders via stock repurchase and dividends. In 2019, the company had returned $8.6 billion to shareholders via stock repurchase and dividends. The company has returned $25 billion for the three-year period ending 2019.
Cash and cash equivalents at the end of 2019 was $898.5 million, compared with $866 million at the end of 2019. Long-term debt as of Dec 31, 2019 was $34,118.1 million, compared with $31,075.3 million at the end of 2018.
2019 Highlights
Full-year adjusted earnings came in at $7.84 per share, reflecting a decline of 1% from 2018. Foreign currency headwinds had a negative impact of 21 cents in 2019. Revenues improved 0.2% in 2019 to $21,076.5 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, McDonald's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. It comes with little surprise McDonald's has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is McDonald's (MCD) Down 7% Since Last Earnings Report?
It has been about a month since the last earnings report for McDonald's (MCD - Free Report) . Shares have lost about 7% in that time frame, outperforming 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 catalysts.
McDonald's Earnings & Revenues Top Estimates in Q4
McDonald's reported fourth-quarter 2019 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate after missing the same in the preceding quarter.
Adjusted earnings came in at $1.97 per share, which beat the consensus mark by a penny. However, the bottom line was flat with the prior-year quarter figure. Meanwhile, foreign currency translation had a negative impact of 2 cents per share on earnings in the quarter under review.
Revenues & Comps Discussion
In the fourth quarter, revenues of $5,349 million beat the Zacks Consensus Estimate of $5,300 million. Moreover, the figure improved 4% year over year. This uptrend can primarily be attributed to increase in revenues from franchised restaurants. Moreover, on a constant-currency basis, the top line improved 4% on a year-over-year basis.
At company-operated restaurants, revenues came in at $2,363.3 million, almost flat year over year. However, the same at franchise-operated restaurants improved 7% to $2,985.7 million.
Global comps improved 5.9% driven by positive comparable sales across all segments. Notably, this marked the 18th consecutive quarter of positive comparable sales. In third-quarter 2019, comps were also up 5.9%. Notably, the company recorded highest global same-store sales growth in a decade.
Solid Comps Across Segments
U.S.: Comps at this segment grew 5% in the fourth quarter, higher than a 4.8% rise in the prior quarter. Deployment of Experience of the Future and strength in core menu items and successful national and local deal offerings drove the segment’s comps.
International Operated Markets: Comps at this segment rose 6.1% year over year, higher than prior-quarter’s rise of 5.6%.
International Developmental Licensed Segment: The segment’s comparable sales increased 7.2% in the fourth quarter. In the preceding quarter, the segment’s comps had risen 8.1%.
Other Information
McDonald's returned $2.3 billion to shareholders via stock repurchase and dividends. In 2019, the company had returned $8.6 billion to shareholders via stock repurchase and dividends. The company has returned $25 billion for the three-year period ending 2019.
Cash and cash equivalents at the end of 2019 was $898.5 million, compared with $866 million at the end of 2019. Long-term debt as of Dec 31, 2019 was $34,118.1 million, compared with $31,075.3 million at the end of 2018.
2019 Highlights
Full-year adjusted earnings came in at $7.84 per share, reflecting a decline of 1% from 2018. Foreign currency headwinds had a negative impact of 21 cents in 2019. Revenues improved 0.2% in 2019 to $21,076.5 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, McDonald's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. It comes with little surprise McDonald's has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.