McDonald’s earnings preview: Golden Arches keep growing amid consumers’ hunt for value

McDonald’s (MCD) is expected to improve its profits again, as consumers turn to the American classic for value meals.

The company, which reports its Q4 results on Feb. 5, is expected to increase its overall same store sales by 4.79%, with US sales growth jumping by 4.45%.

Same-store sales during Q3 were up 8.8%, beating analyst estimates at the time.

In the fourth quarter, adjusted earnings per share are expected to jump 7% to $2.82, while total revenue is expected to grow 9% to $6.5 billion.

The company is also set to share its fiscal 2023 results, where the Street is expecting $25.53 billion in total revenue, up from $23.18 billion in 2022.

As McDonald’s aims to spread Happy Meals worldwide, it has unveiled a sizzling growth plan. During its Investor Day last December, it announced a record expansion to 50,000 locations by 2027.

At the end of Q3, the chain had 41,198 worldwide locations, with more than 39,000 of those owned by franchisees.

While fast food stocks were hammered in 2023 amid fears of softening consumer sentiment, higher food inflation like beef (which may not improve soon given a low supply of cattle), and potential impact of weight-loss drugs, Wall Street seems to think the Hamburglar is still unstoppable.

It’s “hard to see McDonald’s not ‘winning’ in any consumer environment,” Wedbush analyst Nick Setyan wrote in a client note. He projected sustained same-store sales growth in the near term, driven by menu pricing and innovation, loyalty programs, effective marketing, and operational execution and efficiencies.

Glennville, Georgia, McDonald’s fast food restaurant customer at cashier check out. (Photo by: Jeffrey Greenberg/Universal Images Group via Getty Images) (Jeff Greenberg via Getty Images)

Jefferies’ Andy Barish named the stock a top pick in 2024, calling it the “best defensive and offensive play in restaurants,” with “resiliency in an uncertain or weak macro [environment].” Barish expects the chain to further invest in digital, delivery, drive-through, and chicken products.

McDonald’s stock is up 13% in the past year, underperforming the S&P 500’s 20% gain.

As workers gradually return to the office, the chain also seems to be gaining back breakfast diners. Per, 16.7% of store visits in 2023 were made between 7 a.m. and 10 a.m. ET, up from 15.9% in 2022, though it’s still lower than in 2019 when 18% of visits were made during those hours.

Earnings preview breakdown

Here’s what Wall Street expects from McDonald’s Q4 results, per Bloomberg consensus data:

Revenue: $6.45 billion

Adjusted EPS: $2.82

Same-store sales growth: 4.79%

US sales growth: 4.45%

International operated markets sales growth: 5.03%

International developed licensed markets sales growth: 5.06%

Here’s what Wall Street expects from McDonald’s fiscal 2023 results, per Bloomberg consensus data:

Revenue: $25.53 billion

Adjusted EPS: $11.78 per share

Same-store sales growth: 9.41%

US sales growth: 8.81%

International operated markets sales growth: 9.53%

International developed licensed markets sales growth: 10.51%

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].

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