McDonald’s Corporation (NYSE: MCD) is expected to publish its fourth-quarter results next week, amid expectations for a mixed outcome. The market will keep a close watch on the event, looking for updates on business trends as the casual dining industry begins to recover from a challenging phase marked by cautious consumer spending and high operating costs.
McDonald’s stock is yet to recover after falling from its all-time high in October last year, mainly reflecting investors’ concerns over reports of the company’s products causing an e-coli outbreak in certain US states. It has lost about 8% since then and underperformed the market quite often. The company has warned that headwinds related to the e-coli incident might negatively impact its fourth-quarter same-store sales in the US.
Q4 Report on Tap
The December quarter report is scheduled for release on Monday, February 10, at 7:00 am ET. It is estimated that McDonald’s adjusted earnings declined to $2.86 per share in the final three months of FY24 from $2.95 per share a year earlier. The consensus revenue estimate for Q4 is $6.48 billion, which represents a modest year-over-year increase.
From McDonald’s Q3 2024 earnings call:
“When our system works together to put our customers and communities first, there are few things we can’t achieve. McDonald’s is not a stranger to adversity, but we have always risen to the challenge and come out stronger as a business. While there is still work to be done, when we execute with precision, whether through a sharp focus on delivering great value or by staying culturally relevant with global campaigns like Collector’s Edition, we do succeed, even in tough environments.”
In Q3, adjusted profit increased to $3.23 per share from $3.19 per share in the comparable period of 2023. Meanwhile, unadjusted earnings dropped to $2.26 billion or $3.13 per share in the September quarter from $2.32 billion or $3.17 per share a year earlier. Global comparable store sales dropped 1.5% annually during the three months. At $6.87 billion, third-quarter revenue was up 3% year-over-year. Both revenue and adjusted earnings exceeded analysts’ estimates, after missing in the prior quarter.
E. coli Outbreak
Last year, McDonald’s suffered a setback in the US after an investigation by the Centers for Disease Control and Prevention showed that its Quarter Pounders caused an e-coli outbreak that sickened dozens of people. While a series of promotional programs have helped the company regain customer trust to some extent, some franchises are still struggling with sluggish sales.
On Wednesday, McDonald’s stock traded slightly below $290, after staying almost flat for about a week. It has gained 5% in the past six months.