Yahoo Finance McDonald's (MCD) Gears Up for Q1 Earnings: What's in the Cards?
McDonald's Corporation MCD is scheduled to report first-quarter 2024 results on Apr 30, before the opening bell. In the last reported quarter, the company reported an earnings surprise of 5%.
How are Estimates Placed?
The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.70 per share, indicating an improvement of 2.7% from $2.63 reported in the year-ago quarter.
For revenues, the consensus mark is pegged at $6.2 billion, suggesting growth of 4.6% from the prior-year quarter’s figure.
McDonald's Corporation Price and EPS Surprise
McDonald's Corporation price-eps-surprise | McDonald's Corporation Quote
Let's look at how things have shaped up in the quarter.
Factors at Play
McDonald's first-quarter top line is likely to have increased year over year courtesy of solid digital adoption, menu innovation and unit-expansion efforts. This and compelling value programs, growth in digital and delivery and pricing optimizations are likely to have driven comps improvement in the to-be-reported quarter. Our model predicts first-quarter comps to rise 4.2% year over year.
We expect total U.S. company-operated sales in first-quarter 2024 to be up nearly 3% year over year to $784.2 million.
Scrutiny of International trends, particularly in light of the management's comments (during fourth-quarter earnings call) regarding softness in China and the Middle East, underscores the complexities present. Dismal franchisee cash flows in the France region are likely to add to the negatives. Our model predicts first-quarter franchise revenues in the International Operated Markets to fall 5.7% year over year to $1.4 billion.
Given the substantial presence of McDonald's US co-owned stores in California, recent hikes in the California minimum wage are expected to have exerted pressure on the company’s margins in the first quarter.
Our Take
Investors should consider holding onto McDonald's shares due to its enduring strength and stability, underscored by a robust track record. With MCD’s shares having gained 7.8% in the past six months compared with the industry's 14.9% rally, a cautious approach is warranted amid uncertain market signals. Restricting fresh entry into MCD during this period helps manage exposure to these uncertainties, allowing investors to await a more favorable entry point or a more precise trajectory for the company's performance.
What Our Model Says
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 odds of an earnings beat.
Earnings ESP: McDonald’s has an Earnings ESP of +0.08%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #3 (Hold).
Other Stocks Poised to Beat Earnings Estimates
Here are some other stocks from the Zacks Retail-Wholesale space that investors may consider, as our model shows that these also have the right combination of elements to post an earnings beat:
Wingstop Inc. WING has an Earnings ESP of +4.60% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The stock has risen 44.2% so far this year. WING’s earnings beat estimates in each of the trailing four quarters, the average surprise being 21.3%.
Shake Shack Inc. SHAK has an Earnings ESP of +3.33% and a Zacks Rank #3.
Shares of SHAK have gained 36.8% so far this year. SHAK’s earnings beat estimates in each of the trailing four quarters, the average surprise being 92.6%.
Restaurant Brands International Inc. QSR has an Earnings ESP of +0.44% and a Zacks Rank of 3.
Shares of QSR have declined 6.4% so far this year. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 10.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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McDonald's Corporation (MCD) : Free Stock Analysis Report
Restaurant Brands International Inc. (QSR) : Free Stock Analysis Report
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
Wingstop Inc. (WING) : Free Stock Analysis Report
