What to Expect When McDonald's Reports Q4 Earnings

Chris Lange

Source: Wikimedia Commons
McDonald’s Corp. (NYSE: MCD) is scheduled to release its most recent quarterly results before the markets open on Tuesday. The consensus estimates call for $1.59 in earnings per share (EPS) and $5.23 billion in revenue. The same period of last year reportedly had EPS of $1.43 and $6.03 billion in revenue.

In the third quarter, McDonald’s revenue dropped 10% to $5.6 billion, but most of this had to do with its program to refranchise some of its operations. Operating income rose 44% to $3.1 billion. The most impressive improvement was in same-store sales. Global comparable store sales rose 6%. U.S. sales rose 4.1%. Food sales were the primary driver. At that time, McDonald’s management pointed out:

In the U.S., third quarter comparable sales increased 4.1%, reflecting the national beverage and McPick 2 value promotions, along with the continued success of the Signature Crafted premium sandwich platform. Operating income for the quarter increased 6%, reflecting higher sales-driven franchised margin dollars and G&A savings.

McDonald’s also announced earlier this month that by 2025 all the company’s guest packaging will be made from renewable, recycled or certified sources. Perhaps more ambitiously, the company set a goal to recycle at every McDonald’s store around the globe.

To reach its goals, the company said it will consult with industry experts, local governments and environmental associations to improve McDonald’s packaging and recycling practices. The company expects its efforts to drive smarter packaging designs, to implement new recycling programs, to establish new measurement programs and to educate staff and customers.

So far in 2017, McDonald’s is lagging the broad markets, with its stock up just over 3% year to date. Over the past 52 weeks, the stock is actually up over 46%.

A few analysts weighed in on McDonald’s ahead of the earnings report:

  • Nomura has a Buy rating with a $198 price target.
  • Credit Suisse has an Outperform rating and a $191 target.
  • Goldman Sachs has a Buy rating with a $200 price target.
  • Barclays has an Overweight rating with a $205 price target.
  • JPMorgan has a Buy rating and a $186 price target.

Shares of McDonald’s traded at $177.85 on Monday, with a consensus analyst price target of $186.57 and a 52-week range of $121.70 to $178.40.