How McDonald's Took a Big Bite Out of Earnings

McDonald’s Corp. (NYSE: MCD) reported its fourth-quarter financial results before the markets opened on Monday. The golden arches had $1.31 in earnings per share (EPS) on $6.34 billion in revenue. That compares to consensus estimates from Thomson Reuters of $1.23 in EPS on revenue of $6.22 billion. In the same period of the previous year, the company posted EPS of $1.13 and $6.57 billion in revenue.

In the United States, fourth-quarter comparable sales increased 5.7%, benefiting from the October launch of All Day Breakfast and, to a lesser extent, unseasonably mild weather. Comparable sales for the International segment increased 4.2% for the quarter, led by strong performance in the United Kingdom, Canada and Australia.

The company returned $2.3 billion to shareholders through share repurchases and dividends in the fourth quarter and $9.4 billion for the full year. This brings the cumulative return to shareholders to $15.8 billion against the targeted return of roughly $30 billion for the three-year period ending 2016.

Some of the main fourth quarter results were:

  • Global comparable sales increase of 5.0%
  • Consolidated revenues decrease of 4% (increase of 5% in constant currencies)
  • Consolidated operating income increase of 7% (16% in constant currencies)

McDonald’s President and CEO Steve Easterbrook commented on earnings:

We took bold, urgent action in 2015 to reset the business and position McDonald’s to deliver sustained profitable growth. We ended the year with momentum, including positive comparable sales across all segments for both the quarter and the year – a testament to the swift changes we made and the early impact of our turnaround efforts. We enter 2016 committed to managing the business for the long term and aligned as a System around the critical imperative that we must run great restaurants each and every day for our valued customers.

Shares of McDonald’s closed Friday up 0.5% at $118.40, with a consensus analyst price target of $121.10 and a 52-week trading range of $87.50 to $120.23. Following the release of the earnings report, shares were up 2.8% at $121.76 in early trading indications Monday.