The top line will be hurt by the impact of strategic refranchising initiative as well as the effect of changes in interest rates and foreign currency fluctuations. However, this could generate more stable and predictable revenue and cash flow in the future. The fast-food restaurant chain has managed to lower expenses on a year-over-year basis over the past six quarters.
As of June 30, 2019, the company has 38,108 restaurants in 120 countries of which 35,461 were licensed to franchisees. McDonald’s believes that ownership of the real estate, combined with the co-investment by franchisees, enables to achieve restaurant performance levels. Franchisees are also responsible for reinvesting capital in their businesses over time.
Read: Walgreens stock heads for cautious stance on future concerns
Analysts expect the company’s earnings to increase by 5.20% to $2.21 per share and revenue will rise by 2.30% to $5.49 billion for the third quarter. The company has surprised investors by beating analysts’ expectations twice in the past four quarters. The majority of the analysts recommended a “buy” rating with an average price target of $232.44.
For the second quarter, McDonald’s reported a 1% rise in earnings helped by a 6.5% growth in comparable-store sales despite flat revenues. The growth in comps reflects solid sales across all segments. In the US, comparable sales increased by 5.7%, helped mainly by the local deal offerings.
Get access to timely and accurate verbatim transcripts that are published within hours of the event.