McDonald’s Earnings Report: What to Expect for NYSE:MCD

As McDonald’s (NYSE:MCD) gears up to report its second-quarter earnings, Wall Street analysts and investors are keenly observing the fast-food giant’s performance. The company has faced a tumultuous year so far, with its stock falling by approximately 15%. This decline has triggered concerns about consumer spending and the overall health of the restaurant industry. However, McDonald’s implemented strategic discounts towards the end of the second quarter, which might have mitigated some of the stock’s downward trajectory. Analysts are eager to see if these measures have had a positive impact on the company’s financials.

According to StreetAccount estimates, Wall Street expects McDonald’s to report flat same-store sales in the United States for the quarter. This is a stark contrast to the 10.3% increase in domestic same-store sales recorded in the same period last year, which was largely driven by a successful viral campaign featuring the beloved mascot Grimace. The company has been grappling with various challenges, including ongoing boycotts in the Middle East, which have affected its sales in that region. These factors will play a crucial role in shaping the company’s overall financial report for the quarter.

In an interesting move at the beginning of the second quarter, McDonald’s purchased 225 restaurants from its Israeli franchisee. This acquisition could have significant implications for the company’s financial performance. Additionally, global events such as the COVID-19 pandemic and geopolitical tensions continue to pose challenges for the company. Analysts are anxious to see how McDonald’s has navigated these hurdles and whether it has managed to turn a profit or incurred a loss. The company’s stock prices will likely reflect its efforts to adapt to these changing market conditions.

McDonald’s, known for its global presence and innovative marketing strategies, has been closely monitored by Wall Street analysts. The company’s stock performance is often seen as a bellwether for the entire fast-food industry and the broader market. The success or failure of McDonald’s can have ripple effects on its suppliers, employees, and related businesses. In the second quarter, the company implemented discounts, which could be a factor in their financial report. However, these discounts may not be sufficient to offset the overall decline in same-store sales for the quarter.

Marketing campaigns and strategies have always been a cornerstone of McDonald’s success. The company’s ability to launch successful campaigns, such as the one featuring Grimace, plays a significant role in its financial performance. Geographic factors, such as sales in the United States and the Middle East, will also influence the company’s overall sales and profits. Analysts will be closely watching McDonald’s report for insights into the current state of the fast-food industry and broader economic trends. The company’s performance in these areas will provide valuable information for investors and stakeholders.

McDonald’s (NYSE:MCD) will announce its earnings results tomorrow before market hours. Last quarter, the company met analysts’ revenue expectations, reporting revenues of $6.17 billion, marking a 4.6% year-on-year increase. McDonald’s also beat analysts’ gross margin estimates. This quarter, analysts expect a 2% year-on-year growth in revenue to $6.63 billion, a slowdown from the 13.6% increase recorded in the same quarter last year. Adjusted earnings are expected to be at $3.07 per share. Notably, analysts have not changed their estimates for the company in the last 30 days, suggesting they believe the business will remain stable heading into earnings.

Despite meeting revenue expectations last quarter, McDonald’s has missed Wall Street’s revenue estimates twice in the last two years. Other companies in the restaurant segment, such as Domino’s and BJ’s, have already reported their Q2 results, providing a benchmark for what to expect. Domino’s reported a 7.1% year-on-year increase in revenue, meeting analysts’ expectations, while BJ’s reported flat revenue, in line with consensus estimates. Following their results, both Domino’s and BJ’s stock prices traded lower by 14.6% and 15.4%, respectively. Share prices for the restaurant segment have remained steady in the lead-up to earnings, with McDonald’s stock price remaining unchanged.

The average analyst price target for McDonald’s is $301.8, compared to the current share price of $251.18. A profitable growth stock benefiting from the rise of AI has also been identified and is available for free via a provided link. As McDonald’s prepares to report its fiscal second-quarter results on July 29, there is speculation that the company will beat earnings and revenue expectations for the quarter. Despite a decline in stock price from $297 to $251 this year, McDonald’s peer, Restaurant Brands International Inc. (NYSE: QSR), has also seen a decline in stock price due to concerns about rising costs and pricing power.

Investors will be closely watching McDonald’s pricing strategy and its impact on demand. The company may struggle with pricing power due to its large proportion of lower-income customers. McDonald’s expects the quick-service restaurant industry to experience negative traffic in the US for 2024. Despite these challenges, there are signs that investors should not overlook, as McDonald’s could still be a solid long-term bet. The company is investing heavily in digital and home-delivery services and has a strong balance sheet, which could help it weather the current economic environment.

McDonald’s ability to maintain culturally relevant menus is another strength that could contribute to its long-term success. Despite a current valuation of 21x forward price-to-earnings ratio, which is below its 5-year average, the stock could still see growth in the long term. Based on Trefis estimates, McDonald’s revenue for Q2 2024 is expected to be around $6.7 billion, slightly higher than the consensus estimate. This marks the company’s 13th consecutive quarter of global same-store sales growth. McDonald’s plans to direct more than half of its $2.5-2.7 billion capital expenditure towards new restaurant unit expansion.

The company’s franchises also provide an additional source of income through rental fees. Around 38% of McDonald’s revenue in Q1 2024 came from sales at company-owned restaurants. Based on Trefis’ analysis, McDonald’s EPS for Q2 2024 is expected to be $3.10, slightly higher than the consensus estimate. Trefis’ valuation of McDonald’s suggests a price of $280, which is 11% higher than the current market price. As McDonald’s prepares to report its second-quarter earnings, the company’s performance will be closely scrutinized by analysts and investors alike.

McDonald’s Corp (MCD) will report its second-quarter earnings on Monday, with Wall Street expecting earnings per share (EPS) of $3.09 and revenues of $6.6 billion. The company will report before market hours. Despite a 13.33% decline in the past year and trading 14.55% lower year-to-date, McDonald’s stock has shown bearish signals ahead of the earnings announcement. Its current share price of $251.46 is below the 5-day, 20-day, and 50-day exponential moving averages, indicating strong selling pressure and the potential for further declines.

The 8-day simple moving average is $255.96, and the 20-day SMA is $253.15, both showing bearish momentum. The 50-day and 200-day SMA are at $256.62 and $274.43, respectively, indicating a significant gap below these longer-term trends. The moving average convergence divergence (MACD) indicator is at 0.67, highlighting the bearish outlook. The relative strength index (RSI) is at 44.41 and trending downward, suggesting the stock is nearing oversold territory. However, the lack of bullish momentum makes a reversal unlikely.

The Bollinger Bands range from $245.67 to $262.83, with the stock price near the lower band, suggesting limited upside potential and continued selling interest. Overall, the technical environment for McDonald’s stock is challenging, indicating the possibility of further weakness. Despite these bearish signals, the consensus analyst rating on the stock is a buy, with a price target of $307.62. Stifel, Wedbush, and TD Cowen’s ratings suggest an 11.37% upside potential with an average price target of $281.67. At the time of publication, McDonald’s stock was up 0.71% to $253.24.