Core Insights - McDonald's reported solid global comparable sales and loyalty momentum in Q3, but underlying growth slowed, and company-operated restaurant sales declined [1][2] Financial Performance - Adjusted earnings per share for Q3 were $3.22, missing the analyst consensus estimate of $3.33 [2] - Quarterly sales totaled $7.07 billion, below the expected $7.095 billion; consolidated revenues increased by 3% (1% in constant currencies) [2] - Revenues from franchised restaurants rose by 7% to $4.363 billion, while sales from company-owned restaurants fell by 3% to $2.563 billion [2][3] - Global comparable sales increased by 3.6%, with a 2.4% gain in the U.S. and a 4.3% increase in International Operated Markets [4] - Operating income rose to $3.357 billion from $3.188 billion year-over-year [4] Loyalty and Customer Engagement - Loyalty-member Systemwide sales across 60 markets reached approximately $34 billion over the last twelve months, with over $9 billion for the quarter [5] - The company emphasized delivering value, menu innovation, and effective marketing to drive customer traffic [5] Currency Impact - Systemwide sales and revenue were negatively impacted by the war in the Middle East, particularly in International Developmental Licensed Markets [6] - Favorable foreign currency translation added $151 million to total revenues and positively impacted diluted earnings per share by $0.04 [7] Future Outlook - McDonald's reaffirmed its 2025 outlook, expecting net restaurant unit expansion to contribute slightly more than 2% to Systemwide sales growth in constant currencies [8] - Projected capital expenditures for 2025 are between $3.0 billion and $3.2 billion, primarily for new restaurant expansions [8] - The company plans to open approximately 2,200 restaurants globally in 2025, including about 600 in the U.S. and International Operated Markets [9] - Expected free cash flow conversion rate is in the low-to-mid 80% range [9]

Core Insights - McDonald's reported a 3% year-over-year revenue increase to $7.08 billion in Q3, slightly below the market expectation of $7.1 billion [1] - Adjusted net income remained stable at $2.31 billion compared to the same period last year [1] - Global same-store sales grew by 3.6%, slightly exceeding the expected growth of 3.55% [1] - In the U.S. market, same-store sales increased by 2.4%, surpassing expectations, primarily driven by an increase in customer spending per visit [1]

McDonald's Corporation (NYSE: MCD) reported third-quarter earnings this morning that fell short on both fronts. ...

Financial Data and Key Metrics Changes - In Q3, global comparable sales growth was over 3.5%, with system-wide sales growth exceeding 6% in constant currency [4][12] - Adjusted earnings per share was $3.22, with a 4-cent benefit from foreign currency translation, while adjusted earnings per share on a constant currency basis declined 1% year-over-year [19][21] - Total restaurant margin dollars surpassed $4 billion for the first time, reflecting a 4% increase in constant currency [19][21] Business Line Data and Key Metrics Changes - In the U.S., comparable sales increased by 2.4%, with the successful launch of Snack Wraps contributing to strong unit performance [12][13] - Internationally operated markets saw a 4.3% increase in comparable sales, driven by strong performances in Germany and Australia [16][18] - The Extra Value Meals (EVM) program accounted for about 30% of total transactions in the U.S., with a targeted minimum discount level of 15% [15][39] Market Data and Key Metrics Changes - QSR traffic from lower-income consumers in the U.S. declined nearly double digits, while traffic growth among higher-income consumers increased nearly double digits [5][66] - In Germany, McDonald's achieved its strongest comparable sales results in two years, while Australia gained market share for the second consecutive quarter [16][18] - In China, macroeconomic pressures continue to affect performance, but the company remains confident in long-term growth opportunities [18][67] Company Strategy and Development Direction - The company is focused on its "Accelerating the Arches" strategy, emphasizing value, menu innovation, and marketing execution [4][21] - A new category structure has been established to enhance menu innovation, particularly in high-potential growth categories like chicken and beverages [9][10] - The company plans to invest in growth opportunities, including adding 1,000 new restaurants in China and enhancing digital capabilities [18][22] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about consumer health in the U.S. and top international markets, expecting pressures to continue into 2026 [5][50] - The company is optimistic about achieving solid growth in Q4, driven by strong marketing initiatives and value offerings [51][52] - Inflationary pressures are expected to persist, particularly in beef prices, which may impact margins [54][74] Other Important Information - The company announced a 5% increase in its dividend, marking the 49th consecutive year of dividend increases [22][23] - The EVM program is seen as a long-term strategy to improve value perception and drive traffic among lower-income consumers [7][41] Q&A Session Summary Question: How can the U.S. business improve profitability while enhancing value perception? - Management emphasized that delighting customers will attract more traffic, ultimately improving unit economics and value perception [30][32] Question: What level of support is being provided to franchisees for the value strategy? - The company is providing $40 million in marketing support and co-investing in price reductions for the EVM program, with expectations for continued support into 2026 [38][39] Question: How is the company viewing the sales trajectory in the U.S.? - Management expects comp sales growth to accelerate in Q4, driven by successful marketing initiatives and a favorable comparison to last year's food safety incident [51][52] Question: Is there evidence of share shift from fast casual to QSR among higher-income consumers? - The company continues to gain share with higher-income consumers, indicating that value matters across all income levels [76][81] Question: What will it take to turn the low-income consumer from a headwind to a tailwind? - Management noted that relief in cost of living and growth in real incomes are necessary for improvement in spending behavior among low-income consumers [73][74]

McDonald’s (NYSE:MCD) Q3 2025 Earnings Call November 05, 2025 08:30 AM ET Company ParticipantsIan Borden - CFODexter Congbalay - VP of Investor RelationsAndy Barish - Managing DirectorLauren Silberman - DirectorChris Kempczinski - Chairman and CEODavid Palmer - Senior Managing DirectorDennis Geiger - Executive DirectorConference Call ParticipantsJeff Bernstein - Equity Research AnalystJohn Ivankoe - Managing Director and Equity Research AnalystSara Senatore - Senior Research AnalystJon Tower - Director and ...

McDonald's (MCD) reported $7.08 billion in revenue for the quarter ended September 2025, representing a year-over-year increase of 3%. EPS of $3.22 for the same period compares to $3.23 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $7.07 billion, representing a surprise of +0.15%. The company delivered an EPS surprise of -3.88%, with the consensus EPS estimate being $3.35. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall ...

Financial Data and Key Metrics Changes - In Q3 2025, McDonald's reported global comparable sales growth of over 3.5% and system-wide sales growth of more than 6% in constant currency, driven by new unit openings [3][11] - Adjusted earnings per share was $3.22 for the quarter, reflecting a 1% decline on a constant currency basis due to a higher effective tax rate [18][19] - Total restaurant margin dollars exceeded $4 billion, marking a 4% increase in constant currency, the first time surpassing the $4 billion mark [18] Business Line Data and Key Metrics Changes - In the U.S., comparable sales increased by 2.4%, with the successful launch of Snack Wraps contributing to strong unit performance [11][12] - Internationally operated markets (IOM) saw comparable sales growth of 4.3%, with strong performances in Germany and Australia [15] - The U.S. Extra Value Meals (EVM) program accounted for about 30% of total transactions, with a targeted discount level of 15% [13][32] Market Data and Key Metrics Changes - QSR traffic from lower-income consumers in the U.S. declined nearly double digits, while traffic from higher-income consumers increased nearly double digits [4][11] - In Germany, McDonald's achieved its strongest comp sales results in two years, driven by disciplined execution of its value menu [15][16] - Japan has seen market share gains for six consecutive quarters, supported by strong local marketing and innovation [7][15] Company Strategy and Development Direction - The company is focused on its "Accelerating the Arches" strategy, emphasizing value, menu innovation, and marketing execution to drive traffic and guest count [3][19] - McDonald's is investing in high-growth categories such as chicken and beverages, with new product launches aimed at enhancing long-term growth [10][19] - The company plans to continue expanding its restaurant footprint, targeting 50,000 restaurants globally by the end of 2027 [20] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the health of consumers in the U.S. and top international markets, expecting pressures to continue into 2026 [4][11] - The company is optimistic about its ability to deliver solid growth in Q4, driven by strong execution across value, marketing, and menu innovation [45][46] - Inflationary pressures are expected to persist, impacting margins, but management believes that focusing on value and affordability will yield long-term benefits [29][48] Other Important Information - McDonald's announced a 5% increase in its dividend, marking the 49th consecutive year of dividend increases, reflecting the company's commitment to returning capital to shareholders [20][21] - The company is actively investing in digital transformation and loyalty programs to enhance customer engagement and drive sales [14][71] Q&A Session Summary Question: How can McDonald's improve restaurant profitability while enhancing value perception? - Management emphasized that delighting customers and driving traffic will ultimately improve unit economics, with a focus on getting more customers through the door [27][28] Question: What level of support is McDonald's providing to franchisees for the value strategy? - The company is providing $40 million in marketing support for EVMs and co-investing in price reductions, with expectations for continued support into Q1 2026 [31][33] Question: What is the outlook for U.S. sales trajectory in the coming quarters? - Management expects comp sales growth to accelerate in Q4, driven by successful promotions and a favorable comparison to last year's food safety incident [45][46] Question: Is there evidence of share shift from fast casual to QSR among higher-income consumers? - McDonald's continues to gain share with higher-income consumers, with strong performance attributed to value and digital initiatives [66][70] Question: What will it take to turn the low-income consumer from a headwind to a tailwind? - Management noted that relief in cost of living and growth in real incomes are necessary for improvement in spending behavior among low-income consumers [64][65]

Economic Data - The ADP private payroll report showed an increase of 42,000 jobs, surpassing the expected 25,000 and a previous decline of 32,000 jobs [2][5] - Job creation was primarily driven by larger companies, with those employing 500 or more workers contributing significantly to the hiring [3] - Sector breakdown revealed gains in trade and transportation utilities (+47,000), education and health services (+25,000), and financial activities (+11,000), while leisure and hospitality (-5,000), professional and business services (-15,000), and information services (-17,000) saw declines [3][4] Mortgage Applications - Mortgage applications decreased by 1.9% this week, following a significant increase of 7.1% the previous week [7][8] - Purchase applications fell by 6%, while refinance applications dropped by 2.8%, although the overall trend in the last two weeks has been positive [8] Federal Reserve Outlook - The probability of a 25 basis point rate cut by the Federal Reserve has risen to 72%, up from a previous 60% [9] Company Earnings - McDonald's stock rose by approximately $8 to $9 in pre-market trading despite an earnings per share miss, attributed to better sales and revenue, along with strong guidance [12] - AMD's stock experienced a decline of about $5 to $6 in pre-market trading, but it has seen a substantial increase of 153% over the last six months, indicating strong overall performance despite short-term fluctuations [13][14]

Earnings Reports Overview - A busy earnings week begins on Wednesday with notable companies such as Novo Nordisk A/S and McDonald's Corporation reporting pre-market [1] - Technology and semiconductor companies including Applovin Corporation, QUALCOMM Incorporated, and Arm Holdings plc are scheduled to report after market close on the same day [1] - Thursday will feature earnings from AstraZeneca PLC and ConocoPhillips pre-market, while Friday will highlight reports from Constellation Energy Corporation, KKR & Co. Inc., and Enbridge Inc, focusing on utilities and financial sectors [1] - The following Monday and Tuesday are expected to have fewer major market movers, indicating a potential slowdown in earnings announcements [1]

Core Insights - McDonald's reported quarterly earnings of $3.22 per share, missing the Zacks Consensus Estimate of $3.35 per share, representing an earnings surprise of -3.88% [1] - The company posted revenues of $7.08 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.15% and showing an increase from $6.87 billion year-over-year [2] - The stock has added about 3.2% since the beginning of the year, underperforming the S&P 500's gain of 15.1% [3] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $3.12 on revenues of $6.86 billion, and for the current fiscal year, it is $12.32 on revenues of $26.7 billion [7] - The estimate revisions trend for McDonald's was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Retail - Restaurants industry, to which McDonald's belongs, is currently in the bottom 13% of the Zacks Industry Rank, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact McDonald's stock performance [5]