Analysts on Wall Street project that McDonald's (MCD) will announce quarterly earnings of $2.81 per share in its forthcoming report, representing a decline of 4.8% year over year. Revenues are projected to reach $6.48 billion, increasing 1.1% from the same quarter last year.The consensus EPS estimate for the quarter has undergone a downward revision of 1.3% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial estimates du ...

The market expects McDonald's (MCD) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on February 10, 2025, might help the stock move higher if these key numbers ar ...

Company Performance - McDonald's stock closed at $290.32, reflecting a slight increase of +0.07% from the previous day, underperforming compared to the S&P 500's gain of 0.53% [1] - Over the past month, McDonald's stock has risen by 0.08%, which is below the Retail-Wholesale sector's increase of 5.57% and the S&P 500's increase of 1.24% [1] Upcoming Earnings - McDonald's is set to release its earnings report on February 10, 2025, with an expected EPS of $2.82, indicating a decline of 4.41% compared to the same quarter last year [2] - The consensus estimate for revenue is projected at $6.48 billion, representing a growth of 1.11% year-over-year [2] Analyst Forecasts - Recent revisions to analyst forecasts for McDonald's are important as they reflect changes in near-term business trends, with positive revisions indicating optimism about the company's outlook [3] Zacks Rank and Valuation - The Zacks Rank system currently rates McDonald's at 4 (Sell), with the consensus EPS estimate having decreased by 0.95% in the past month [5] - McDonald's has a Forward P/E ratio of 23.41, which is lower than the industry's average Forward P/E of 23.93, and a PEG ratio of 3.85 compared to the industry's average of 2.11 [6] Industry Context - The Retail - Restaurants industry, part of the Retail-Wholesale sector, holds a Zacks Industry Rank of 46, placing it in the top 19% of over 250 industries [7]

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Core Viewpoint - McDonald's Corporation is experiencing a decline in analyst confidence and facing significant challenges in the quick-service restaurant sector, leading to downward revisions in earnings estimates for 2025 [1][19]. Financial Performance - The 2025 earnings per share (EPS) estimates for McDonald's have been revised down from $12.53 to $12.47 over the past 60 days, indicating weakening analyst confidence [1]. - Current quarter EPS estimates are at $2.83, down from $2.91 90 days ago, while next year's EPS remains at $12.47 [2]. - McDonald's shares have declined by 11.6% over the past three months, compared to a 6% decline in the Zacks Retail - Restaurants industry [4]. Comparable Store Sales - Global comparable sales for McDonald's turned negative in Q3 2024, declining by 1.5% compared to an 8.8% growth in the same quarter the previous year [3][6]. - Internationally operated markets also saw a decrease in comparable store sales, with a 2.1% decline against an 8.3% growth in the prior-year quarter [7]. - The IDL segment experienced a 3.5% decline in comparable sales, contrasting with a 10.5% growth in the previous year [7]. Economic and Industry Challenges - Inflation has led budget-conscious consumers to prefer home-cooked meals over dining out, negatively impacting McDonald's business [3]. - Rising labor costs, particularly in the U.S., have increased wage expenses above mid-single digits, further squeezing margins [8]. - A recent E. coli outbreak linked to McDonald's products has raised food safety concerns, potentially damaging brand trust and consumer loyalty [9]. Strategic Initiatives - McDonald's is enhancing its "Accelerating the Arches" framework, focusing on innovation, value offerings, and digital integration to stabilize its business [10]. - The company is emphasizing its Everyday Affordable Price (EDAP) platform to attract price-sensitive consumers, with new product launches aimed at boosting menu excitement [11]. - Digital growth is a priority, with investments in loyalty programs like MyMcDonald's Rewards to drive customer engagement and repeat visits [12]. - Operational efficiencies are being improved through initiatives like the Ready on Arrival (ROA) program, which optimizes kitchen operations [13]. Marketing and Brand Strategy - Marketing campaigns, such as the Grimace Shake promotion, have successfully leveraged nostalgia to capture consumer interest [14]. - McDonald's is trading at a forward price-to-earnings ratio of 22.35X, below the industry average of 24.55X, indicating a potential bargain [15]. Technical Indicators - McDonald's stock is currently trading at $279.74, below its 50-day moving average of $292.52, suggesting a lack of strong momentum in the near term [16].

Core Insights - McDonald's is a significant success story in the foodservice industry with nearly 42,000 locations globally and has been publicly traded since April 1965 at an initial price of $22.50 per share [1][2] Stock Performance - The current stock price of McDonald's is approximately $292, indicating solid long-term investment returns for shareholders [2] - McDonald's has executed a total of 12 stock splits over the years, which has significantly contributed to its stock performance [2][4] Stock Split History - An investment of one share at the IPO would have resulted in 729 shares after 60 years due to the 12 stock splits, translating to a total value of $212,868 from the initial $22.50 investment [4] Dividend Income - McDonald's has been paying dividends since the mid-1970s, providing substantial income to shareholders, with 729 shares generating an annual income stream of about $5,160 today, even without reinvesting dividends [5]

Core Viewpoint - McDonald's has experienced a mixed performance in 2024, with a notable rebound expected in 2025 due to bullish analyst updates and strong fundamentals [2][5][11] Group 1: Financial Performance - McDonald's shares are currently trading 11% below their all-time highs, with a market cap exceeding $200 billion [1] - The company missed analyst expectations for earnings in the first half of 2024 but reported record revenue in October, offsetting some weaknesses in comparable sales [2][3] - The stock has a 12-month price forecast of $321.39, indicating a potential upside of 13.49% based on 27 analyst ratings [5] Group 2: Analyst Sentiment - Recent bullish updates from analysts, including Citi's upgrade from Neutral to Buy, suggest significant upside potential for McDonald's stock [5][8] - Loop Capital's price target of $342 indicates a targeted upside of approximately 20% from recent closing prices [5] - McDonald's was named one of Wells Fargo's top restaurant picks for 2025, reinforcing its potential to reclaim previous highs [6] Group 3: Market Conditions - Despite the positive outlook, there are bearish risks due to a broader cooling in investor sentiment towards equities and the restaurant industry [7][8] - Citigroup warned of potential headwinds in 2025, including a slowing labor market and a possible decline in industry sales [7] Group 4: Technical Analysis - The stock's Relative Strength Index (RSI) is currently at 33, indicating oversold conditions and suggesting a potential for a strong rebound [9][10] - A reading below 30 typically indicates oversold conditions, and with McDonald's nearing this threshold, a recovery may be imminent [10]

Company Performance - McDonald's stock closed at $283.63, reflecting a +0.47% change from the previous day, outperforming the S&P 500's daily gain of 0.16% [1] - Over the past month, McDonald's shares experienced a loss of 4.82%, which is worse than the Retail-Wholesale sector's loss of 4.64% and the S&P 500's loss of 2.2% [1] Earnings Projections - The upcoming earnings report for McDonald's is projected to show earnings per share (EPS) of $2.84, indicating a 3.73% decrease from the same quarter last year [2] - The Zacks Consensus Estimate for revenue is expected to be $6.5 billion, representing a 1.51% increase from the previous year [2] Analyst Estimates - Recent adjustments to analyst estimates for McDonald's are being closely monitored, as they often reflect changes in near-term business trends [3] - Positive changes in estimates suggest a favorable outlook on the company's business health and profitability [3] Valuation Metrics - McDonald's has a Forward P/E ratio of 22.65, which is a discount compared to the industry average Forward P/E of 23.01 [6] - The company has a PEG ratio of 3.67, while the industry average PEG ratio is 2.03 [6] Industry Context - The Retail - Restaurants industry, part of the Retail-Wholesale sector, holds a Zacks Industry Rank of 137, placing it in the bottom 46% of over 250 industries [7] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Viewpoint - McDonald's has underperformed the market for several years, with a particularly tough year in 2024, raising questions about its future performance and investment viability [1][2]. Performance Comparison - Over the past six years, McDonald's has generated worse returns than the S&P 500 in five of those years, with the only exception being during the market crash in 2022 [3]. - The stock performance compared to the S&P 500 from 2019 to 2024 shows significant underperformance, with McDonald's stock returning -2.2% in 2024 while the S&P 500 returned 23.3% [3]. Sales and Growth Challenges - In the most recent quarter ending September 30, 2024, McDonald's global comparable sales decreased by 1.5%, with only a modest increase of 0.3% in the U.S. market [4]. - The company may face challenges in pushing higher costs onto customers, which could hinder growth and profitability [5]. Investment Considerations - Despite its underperformance, McDonald's may still be a suitable investment for those seeking dividend income and stability, as it offers a dividend yield of 2.4% [3][6]. - Over the past five years, McDonald's shares have risen by 47%, or 65% when including dividends, indicating some value for dividend-focused investors [7]. - The stock is currently trading at a high multiple of 26 times its trailing earnings, suggesting potential challenges in achieving growth [5].