McDonald

The E. coli outbreak that sickened dozens and international pressures will create near-term headwinds for McDonald’s, UBS analysts say in a research note. However, they predict trends will strengthen in the new year, thanks to new menu items, continued promotions and increased marketing. Same-store sales in 3Q and initial October trends show that the restaurant chain’s momentum was improving, prior to the recent food-safety incident. And while macroeconomic challenges persist overseas, the company is either gaining share or notching improvements in trends across all major markets. Analysts raise their price target to $345 and maintain their buy rating.

McDonald’s logged a small gain in U.S. comparable sales during 3Q as it pulled in slightly fewer orders year-over-year but guests spent more on average with each order. The fast-food chain says effective value marketing of its core menu and growth in digital sales and delivery contributed to the 0.3% U.S. comparable sales increase. But analysts had been targeting a 0.7% gain, according to FactSet, thinking that the chain would outperform its U.S. competitors in a tight spending environment for eating out. McDonald’s slides 2.3% to $290.01 premarket.

McDonald’s recorded fewer comparable sales for 3Q due to shortfalls in its international markets that were worse than Wall Street had anticipated. Comps in the fast-food chain’s international operated markets were down 2.1%, led by poor sales in France and the U.K. The company’s international developmental licensed markets saw comps drop 3.5% due to the war in the Middle East and weakening sales in China, which more than offset growth in Latin America. Analysts had been expecting comps in both market groups to slip just 1.2%, according to FactSet. Investors had been bracing for some weakness overseas after Domino’s Pizza recently missed 3Q international sales projections.

McDonald’s says that families and lower-income customers continue to feel pinched across many global markets, making for a challenging environment for fast-food. McDonald’s is pushing its international franchisees to offer more value options, and expects to stay conservative with any price increases. “Consumers are certainly remaining resistant to pricing,” McDonald’s CFO Ian Borden says during an earnings call.

McDonald’s (MCD) faces US sales pressures and value perception concerns but is positioned for improvement in H2 and 2025, UBS said in a note Friday. McDonald’s can improve its pressured value perceptions with a renewed value focus, its scale and marketing advantages, strong core value attributes, and a history of solid performance during periods of heavy discounting, UBS said, adding that the company’s competitive advantages in digital, store remodels, marketing, and operations will continue to drive sales. The investment firm said that franchisee discussions and historical value analysis support its view that “multiple value-focused initiatives,” along with marketing and new product rollouts in the coming quarters should lead to a “positive inflection in US sales trends.” UBS lowered its US same-store sales estimates for the next few quarters due to challenges faced by the quick-service restaurant industry and feedback from franchisees but expects trends to improve sequentially through the year,

McDonald’s (MCD) saw its lowest quarterly same-store sales growth in Q1 since H1 of 2020 and real-time spending data indicate the slow trend will continue in Q2, BofA Securities said in a note Tuesday. The company has been facing declining customer traffic since Q3 2023 and is now lagging peers like Burger King and Wendy’s (WEN), highlighting issues with difficult comparisons and missed execution, BofA said. McDonald’s $5 combo deal aims to address the lack of a national value menu, but overall prices also need to moderate as the company’s cumulative price increase of 20% since 2022 surpasses both Burger King and Wendy’s, the analysts said. BofA said it sees the $5 combo as an urgent move and a temporary measure before introducing a more permanent value offer. The firm lowered the price objective on McDonald’s stock to $288 from $302 and reiterated its neutral rating.

McDonald’s is trying to make more uniformity across its system, and says it’s taking a global approach to how its app and other digital systems are funded by franchisees in the U.S. and four other countries next year. U.S. franchisees will pay a percentage of their digital sales for the app and other services, while McDonald’s says it will invest in new digital products and functions, the company says in a message viewed by WSJ. Restaurants increasingly rely on digital sales, as they are more efficient and allow for targeted marketing to consumers.

McDonald’s (MCD) reported Q1 non-GAAP earnings Tuesday of $2.70 per diluted share, up from $2.63 a year earlier. Analysts polled by Capital IQ expected $2.73. Total revenue for the quarter ended March 31 was $6.17 billion, compared with $5.90 billion a year earlier. Analysts surveyed by Capital IQ expected $6.17 billion. McDonald’s shares were down 2% in recent Tuesday premarket activity.

The following is a summary of the McDonald’s Corporation (MCD) Q1 2024 Earnings Call Transcript: Financial Performance: McDonald’s reported global comparable sales growth of nearly 2% in Q1 2024, marking the 13th consecutive quarter of positive growth. The average franchising cash flow remained strong despite the elevated cost environment. Adjusted earnings per share for the quarter were $2.70, an increase of about 2% in constant currencies. The adjusted operating margin for the quarter was nearly 45%. Inflation from 2023 will carry over into early 2024, impacting both food and paper costs as well as labor. Expectations for operating margins in 2024 are in a ‘mid to high 40s range,’ but it remains uncertain due to macroeconomic factors. Business Progress: McDonald’s is focusing on providing affordable meals by launching everyday value menus across several international markets. The McDonald’s mobile app and digital engagement initiatives are driving increased engagement and frequency from

By Emily Bary and Tomi Kilgore Revenue was slightly above forecasts, but same-store sales growth came up short McDonald’s Corp. said Tuesday its value message continued to resonate with customers during tough times, as the fast-food giant reported first-quarter revenue that rose above Wall Street’s estimates and said it will be testing a bigger burger in the coming months. That helped the stock (MCD) reverse an early sharp loss to trade little changed, even though the company missed profit expectations for the first time in more than two years and also missed on same-store sales. “And as we look to further build on our leadership in beef, or team of chefs from around the world have created a larger, satiating burger,” said Chief Financial Officer Ian Borden on the post-earnings call with analysts, according to an AlphaSense transcript. “We’ll be testing this burger in a few markets later this year,

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: We lower our 12-month target to $287 from $310, 23.4x our 2024 EPS, below MCD’s five-year average forward P/E of 25.6x, reflecting weaker customer traffic trends. We cut our 2024 EPS to $12.26 from $12.30 and 2025’s to $13.41 from $13.53. MCD posted Q1 adj-EPS of $2.70, $0.03 below consensus. Revenue of $6,169M (+ 4.6% Y/Y) was in line with consensus. Adj. operating income rose 2.1% Y/Y to $2,771M vs. $2,825 consensus, with margin contracting 110 bps to 44.9%. Same-store sales rose by 1.9% vs. 2.4% consensus, driven by growth in the U.S. (+2.5%) and Int’l Operated Markets (+2.7%), partly offset by Int’l Developmental Licensed Markets (-0.2%), largely due to the war in the Middle East. Despite a tough macro backdrop, where most consumers seek superior value,

McDonald’s is set to report first-quarter earnings on Tuesday before the market opens. Despite the struggles of the fast-food industry, the Big Mac maker is likely to hold up better. Analysts polled by FactSet expect McDonald’s to post $2.72 per share earnings and $6.16 billion in sales for the first three months of 2024, marking a 3.4% and 4.4% growth from the same quarter a year ago, respectively. Inflation has taken a toll on consumer spending. Lower-income households, the primary customers of fast-food chains, are squeezed particularly hard, especially after food-stamp assistance was cut and student loan payments resumed last year. McDonald’s raised prices by 10% last year. Management noted that lower-income consumers have visited its stores less frequently and are spending less when they do. Meanwhile, price gains at grocery stores have slowed down this year. “Some of those consumers are just choosing to eat at home more often,”