Hello and welcome to Market Domination. I'm Josh Lipton live from our NYC headquarters. A pullback on stocks Tuesday. Investors seeing red after weaker than expected economic data, new tariff comments from President Trump and continued Fed uncertainty. We're going to be diving deeper into those top stories. And there's just an hour of train to go until the closing bell. And right now, stocks lower. The Dow's down about 50 points. Your broad gauge, the S&P 500 down about 4/10 of a percent and your tech heavy ...

Core Insights - McDonald's is expected to report fiscal Q2 earnings on August 6, 2025, with analysts predicting adjusted earnings of $3.14 per share and revenue of $6.7 billion, reflecting a 6% year-over-year growth in earnings and a 3% increase in sales compared to the previous year [2] - The company is facing macroeconomic challenges and weak U.S. traffic but anticipates recovery driven by value pricing, menu innovations, and favorable currency exchange rates [3] - McDonald's has reaffirmed its full-year goals and expects a gradual rebound in Q2 and beyond, with a current market capitalization of $217 billion and revenue of $26 billion over the past twelve months [3] Earnings Performance History - Historically, McDonald's stock has underperformed after earnings announcements, with a decline observed 53% of the time and a median one-day decrease of 0.6% [2] - Over the past five years, there have been 19 earnings data points for McDonald's, with positive one-day returns occurring approximately 47% of the time, dropping to 45% in the last three years [5] - The median of positive returns is 2.7%, while the median of negative returns is -0.6% [5] Trading Strategies - Event-driven traders may benefit from historical trends by timing their trades around earnings announcements [4] - A lower-risk strategy involves assessing the correlation between short-term and medium-term returns after earnings, allowing traders to take positions based on favorable one-day returns [6] - The performance of peers can influence McDonald's stock reaction post-earnings, with pricing potentially starting before the earnings are reported [7]

Core Viewpoint - McDonald's Corporation is expected to report second-quarter 2025 results on August 6, with earnings per share (EPS) estimated at $3.15, reflecting a 6.1% year-over-year increase, and revenues projected at $6.71 billion, indicating 3.5% growth from the previous year [1][3][7]. Earnings Performance - In the last reported quarter, McDonald's earnings exceeded the Zacks Consensus Estimate by 1.1%, with a mixed performance over the past four quarters: two beats, one miss, and one meet [1][2]. - The average earnings surprise over the last four quarters is a miss of 0.2% [2]. Estimate Revisions - The Zacks Consensus Estimate for second-quarter EPS has risen from $3.14 to $3.15 in the last 30 days, indicating positive sentiment [3]. Earnings Prediction Model - The company's Earnings ESP stands at +0.43%, and it currently holds a Zacks Rank of 3 (Hold), suggesting a favorable outlook for an earnings beat [4]. Factors Influencing Performance - McDonald's growth in Q2 is likely driven by strong global comparable sales, consistent customer traffic, menu innovation, and digital engagement [6][7]. - Tailored marketing campaigns and partnerships with celebrities have attracted both loyal and new customers, particularly in international markets [7]. - Digital channels and delivery services have played a significant role in increasing sales and customer engagement [9]. Operational Efficiency - The company's focus on operational efficiency, supply chain optimization, and a franchised model has helped stabilize margins despite rising costs [10]. - Pricing actions taken earlier in the year have been effective in maintaining profitability without significantly impacting customer traffic [10]. Market Performance - Over the past year, McDonald's stock has increased by 12.8%, underperforming the S&P 500's 20.8% gain and the restaurant industry's 8.7% growth [12]. - Competitors like Darden Restaurants, Starbucks, and Yum China have shown higher stock gains, indicating a competitive market landscape [12]. Valuation - McDonald's stock is currently trading at a forward price-to-earnings ratio of 23.56, which is lower than the industry average of 24.72, suggesting a potential valuation opportunity [16]. Investment Considerations - While the company shows steady performance and benefits from digital growth and operational efficiencies, caution is advised for new investors due to macroeconomic headwinds and recent underperformance relative to broader market indices [18][19].

Core Insights - The stock price of McDonald's is currently testing a significant resistance level around $304, with a recent price of $302.80, indicating a critical juncture for potential breakout or renewed selling pressure [2][4]. Technical Analysis - The Ichimoku Cloud analysis shows that the price has oscillated around the Kijun-sen and Tenkan-sen lines, reflecting indecision and reduced volatility, with the cloud narrowing over time [2]. - The RSI stands at 56, suggesting a neutral position but leaning slightly towards bullish momentum, supported by an upward trend in the accumulation/distribution line, indicating underlying accumulation [3]. Upcoming Events - McDonald's upcoming financial release is anticipated to be pivotal, with strong earnings potentially leading to a breakout towards $308 or higher, while weaker results could reinforce resistance and push the stock down to support levels around $296 or $290 [4][5]. Market Conditions - In Q1 2025, McDonald's faced challenges in key markets like the U.S., where weakened consumer sentiment and tightening household budgets led to reduced discretionary spending among its core customer base [6].

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Core Viewpoint - McDonald's is expected to report quarterly earnings of $3.15 per share, a 6.1% increase year-over-year, with revenues projected at $6.71 billion, reflecting a 3.5% increase compared to the same period last year [1]. Earnings Estimates - The consensus EPS estimate has been revised 0.5% higher in the last 30 days, indicating a collective reevaluation by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts estimate 'Revenues- Company-owned and operated sales- Total' to be $2.43 billion, a decrease of 1.2% year-over-year [5]. - 'Revenues- Franchised revenues- Total' is projected to reach $4.15 billion, marking a 5.3% increase from the previous year [5]. - 'Revenues- Total Other revenues' is expected to be $142.01 million, showing a significant year-over-year increase of 59.6% [6]. - 'Revenues- Company-owned and operated sales- International Developmental Licensed Markets & Corporate' is estimated at $169.09 million, indicating a decline of 21.4% year-over-year [6]. Systemwide Restaurant Metrics - Total systemwide restaurants are estimated to be 44,128, up from 42,406 a year ago [7]. - Total systemwide restaurants in International Developmental Licensed Markets & Corporate are projected at 19,940, compared to 18,589 last year [7]. - Total systemwide restaurants in International Operated Markets are expected to reach 10,605, an increase from 10,333 in the same quarter last year [8]. - Total systemwide restaurants in the U.S. are projected at 13,590, compared to 13,484 a year ago [8]. - Total franchised systemwide restaurants are estimated at 42,099, up from 40,238 last year [9]. - Total company-owned and operated restaurants are expected to be 2,046, down from 2,168 a year ago [9]. - Franchised Developmental licensed restaurants are projected at 9,396, an increase from 8,815 last year [10]. - Franchised Foreign affiliated restaurants are estimated at 10,493, compared to 9,531 in the same quarter last year [10]. Stock Performance - McDonald's shares have shown a return of +2% over the past month, slightly trailing the Zacks S&P 500 composite's +2.3% change [10].

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Compensation Structure - McDonald's new employee starting pay is $13 per hour [1] - After 3 years, McDonald's employee pay increases to $17 per hour [1] - McDonald's general manager earns $27 per hour [1] Additional Benefits - McDonald's offers performance bonuses in addition to base pay [1] - McDonald's provides overtime pay at 150% (one and a half times) of the base rate [1]

Company Overview - McDonald's is expected to report quarterly earnings of $3.15 per share, reflecting a year-over-year increase of +6.1% [3] - Revenues are anticipated to reach $6.71 billion, which is a 3.5% increase from the same quarter last year [3] Earnings Estimates and Revisions - The consensus EPS estimate has been revised 0.51% higher in the last 30 days, indicating a positive reassessment by analysts [4] - The Most Accurate Estimate for McDonald's is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +0.43% [12] Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [10] - McDonald's currently holds a Zacks Rank of 3, suggesting a likelihood of beating the consensus EPS estimate [12] Historical Performance - In the last reported quarter, McDonald's exceeded the expected earnings of $2.64 per share by posting $2.67, achieving a surprise of +1.14% [13] - Over the past four quarters, McDonald's has beaten consensus EPS estimates two times [14] Industry Context - Portillo's Inc., another player in the Zacks Retail - Restaurants industry, is expected to post earnings of $0.12 per share, indicating a year-over-year change of +20% [18] - Portillo's revenues are projected to be $195.3 million, up 7.4% from the previous year [18] - Despite a recent revision of the consensus EPS estimate being 5.6% lower, Portillo's has a higher Most Accurate Estimate leading to an Earnings ESP of +10.64% [19]

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