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McDonald's (MCD) Q1 Earnings & Revenues Surpass Estimates

McDonald's Corporation MCD reported first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.

McDonald's president and chief executive officer, Chris Kempczinski, stated, "Running great restaurants is fundamental to our business momentum. We have refocused on operational excellence through our global Performance and Customer Excellence (PACE) initiative, and we've seen significant customer satisfaction improvement around the world. Amidst a challenging operating environment, customer demand for McDonald's Brand remains strong."

Earnings & Revenue Discussion

During first-quarter 2023, McDonald's reported adjusted earnings per share (EPS) of $2.63, surpassing the Zacks Consensus Estimate of $2.31 by 13.9%. In the prior-year quarter, MCD reported an adjusted EPS of $2.28.

McDonald's Corporation Price, Consensus and EPS Surprise

McDonald's Corporation Price, Consensus and EPS Surprise
McDonald's Corporation Price, Consensus and EPS Surprise

McDonald's Corporation price-consensus-eps-surprise-chart | McDonald's Corporation Quote

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Quarterly net revenues of $5,897.8 million beat the consensus mark of $5,576 million by 5.8%. The top line rose 4.1% year over year.

At company-operated restaurants, sales were $2,224.3 million, down 3% year over year. The same at franchise-operated restaurants was $3,587.5 million, up 10% year over year.

Comps Details

In the quarter under discussion, global comps increased 12.6% compared with a rise of 11.8% reported in the prior-year quarter.

Strong Comps Across Segments

U.S.: During the first quarter, comps in the segment rose 12.6% year over year, while a gain of 3.5% was reported in the prior-year period. McDonald’s’ comps for the quarter benefited from a menu price increase, positive guest counts and marketing initiatives. This and continued digital and delivery growth contributed to the upside.

International Operated Markets: Comps in the segment increased 12.6% year over year compared with a gain of 20.4% reported in the year-ago quarter. MCD gained from strong comparable sales in Germany, the U.K., France, Australia and Canada.

International Developmental Licensed Segment: During the quarter, the segment’s comparable sales increased 12.6% year over year compared with a rise of 14.7% reported in the year-ago quarter. McDonald's gained from robust performance in Japan.

Operating Highlights & Expenses

During the first quarter, McDonald’s total operating costs and expenses came in at $3,365.4 million compared with $3,353 million reported in the prior-year quarter.

During the quarter, operating income increased 10% year over year to $2,532.4 million. Net income during the quarter totaled $1,802.3 million, up 63% from $1,104.4 million reported in the year-ago quarter.

Zacks Rank & Key Picks

McDonald's currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Retail-Wholesale sector are Arcos Dorados Holdings Inc. ARCO, Chuy's Holdings, Inc. CHUY, and Darden Restaurants, Inc. DRI.

Arcos Dorados currently sports a Zacks Rank #1 (Strong Buy). ARCO has a long-term earnings growth of 7.8%. Shares of the company have gained 5.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests growth of 7.8% and 14.7%, respectively, from the year-ago period’s levels.

Chuy’s Holdings carries a Zacks Rank #2 (Buy). CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 27.5% in the past year.

The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the corresponding year-ago period’s levels.

Darden carries a Zacks Rank #2. DRI has a long-term earnings growth rate of 10.1%. The stock has gained 8.1% in the past year.  

The Zacks Consensus Estimate for Darden’s 2024 sales and EPS suggests growth of 5.4% and 9.9%, respectively, from the year-ago period’s reported levels.

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