/McDonald)
McDonald's Corporation (MCD), headquartered in Chicago, Illinois, operates and franchises fast food chains under the McDonald's brand. Valued at $207.3 billion by market cap, MCD is the world's largest fast food restaurant chain that offers various food products and soft drinks, and non-alcoholic beverages. With a global presence in over 40,000 locations in more than 100 countries, approximately 95% of its restaurants are owned and operated by independent local business owners. The fast-food giant is expected to announce its fiscal fourth-quarter earnings for 2024 on Monday, Feb. 10.
Ahead of the event, analysts expect MCD to report a profit of $2.85 per share on a diluted basis, down 3.4% from $2.95 per share in the year-ago quarter. The company beat the consensus estimates in two of the last four quarters while missing the forecast on two other occasions.
For the full year, analysts expect MCD to report EPS of $11.75, down 1.6% from $11.94 in fiscal 2023. However, its EPS is expected to rise 6.3% year over year to $12.49 in fiscal 2025.
MCD stock has underperformed the S&P 500’s ($SPX) 24.2% gains over the past 52 weeks, with shares down 1.7% during this period. Similarly, it underperformed the Consumer Discretionary Select Sector SPDR Fund’s (XLY)27% gains over the same time frame.
MCD has been underperforming due to disappointing growth and weak earnings. Its operating margins have been impacted by cost pressures, and international market comparable sales have dropped suggesting weaker demand overall. McDonald's faces challenges in maintaining its market share in a highly competitive industry with consumers seeking healthier food options. Moreover, analysts are concerned about underperformance in key international markets like the Middle East and China.
On Oct. 29, MCD shares closed down marginally after reporting its Q3 results. Its adjusted EPS of $3.23 beat Wall Street expectations of $3.18. The company’s revenue was $6.9 billion, exceeding Wall Street forecasts of $6.8 billion.
Analysts’ consensus opinion on MCD stock is moderately bullish, with a “Moderate Buy” rating overall. Out of 34 analysts covering the stock, 18 advise a “Strong Buy” rating, two suggest a “Moderate Buy,” and 14 give a “Hold.” MCD’s average analyst price target is $324.03, indicating a potential upside of 12.9% from the current levels.
