McDonald's Q3 Preview: Report Shows Visitor Slump — Can Value Meals, Monopoly Help Guidance?

Core Viewpoint - McDonald's Corporation is expected to highlight the significance of value meals and new product launches in its upcoming third-quarter financial results, with analysts predicting a revenue increase compared to the previous year [1]. Earnings Estimates - Analysts forecast McDonald's third-quarter revenue to be $7.09 billion, an increase from $6.87 billion in the same quarter last year [2]. - The expected earnings per share (EPS) for the third quarter is $3.33, up from $3.23 in the previous year [3]. - McDonald's has surpassed revenue estimates in six of the last ten quarters and EPS estimates in eight of the last ten quarters [2][3]. Analyst Ratings and Price Targets - Analysts have generally lowered their price targets for McDonald's stock ahead of the quarterly results [4]. - Recent ratings include: - Mizuho: Neutral rating, price target of $300 - Barclays: Overweight rating, price target raised from $360 to $362 - Citigroup: Buy rating, price target lowered from $381 to $375 - Wells Fargo: Overweight rating, price target lowered from $350 to $340 [9]. Key Items to Watch - A report indicates a 3.5% year-over-year decline in visits to McDonald's during the third quarter, with same-store visits down 4% [5]. - The quick service restaurant (QSR) industry is facing challenges such as inflation and shifts in consumer behavior, contributing to a decline in visits [6]. - Despite these challenges, McDonald's is expected to benefit from the return of value meals and the Monopoly promotion, which began on October 6 [8]. Loyalty Program Insights - Approximately 25% of McDonald's U.S. business comes from its loyalty program, with rewards members visiting more frequently than non-loyalty customers [11]. - The company aims to increase its global loyalty members from 185 million to 250 million by the end of 2027 [12]. - The loyalty program is seen as a key driver for future sales growth, with a focus on increasing customer frequency [10][12]. Market Performance - McDonald's stock closed down 0.66% to $296.37, with a year-to-date increase of 2.24% [13].