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May 29, 2024

McDonald’s Earnings Preview: Can the Fast Food Giant Keep Up its Growth Streak?

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Feb 5, 2024

McDonald’s, the world’s largest fast food chain, is set to report its fourth quarter and full year 2023 earnings results before the market opens on Monday, February 6. Analysts are anticipating another strong quarter capping off what has been an impressive year of growth for the chain.

Steady Growth Throughout 2023

After a slowdown at the height of the pandemic, McDonald’s has been firing on all cylinders with impressive growth over the past year. Some key highlights:

  • Global same-store sales grew nearly 10% in 2022, aided by menu price increases [1]
  • Digital sales hit an all-time high of $6 billion in Q3 2022, representing 30% of total sales in McDonald’s top markets [2]
  • The chain opened 1,900 new stores globally in 2022, on track to hit its goal of having over 40,000 locations by 2025 [3]

This steady growth has been fueled by menu innovation, digital expansion, and store remodels. New offerings like the adult Happy Meal collaboration with Cactus Plant Flea Market led to traffic growth and expanded McDonald’s customer base.

What to Expect in Q4

For the fourth quarter, analysts are forecasting [4]:

  • Revenue: $5.9 billion, up 7% year-over-year
  • Earnings per share (EPS): $2.59, up 11%
  • Global same-store sales growth: Nearly 12%
Financial Metric Q4 2022 Actual Q4 2023 Estimate Year-Over-Year Change
Revenue $5.5 billion $5.9 billion +7%
EPS $2.28 $2.59 +11%
Global Same-Store Sales Growth +12.6% +11.8% -0.8 pp

This follows a strong fiscal 2022 performance where McDonald’s posted adjusted EPS growth of 10% to $9.09 [5].

If McDonald’s meets or exceeds estimates, it will mark the chain’s 9th consecutive quarter of positive same-store sales growth globally as it continues its hot streak [6].

Key Factors to Watch

As McDonald’s reports Q4 earnings, here are some of the key things analysts and investors will be keeping an eye on:

Menu Innovation: New offerings like the Cactus Plant Flea Market box and crossover promotions with brands like Netflix’s Glass Onion have driven interest and traffic. Did these continue to pay dividends in Q4?

Digital Sales Growth: Digital channels now make up 30% of sales for McDonald’s and they continue to be a growth driver. Apps like MyMcDonald’s Rewards in the U.S. have over 27 million active users. Will they fuel more growth?

International Performance: Nearly 65% of McDonald’s locations are now outside the U.S. China, Japan, France and Germany posted strong 2022 results – did that continue amid macro uncertainty?

Increased Prices: Menu prices grew nearly 10% in 2022 helping drive topline growth. Some analysts think McDonald’s still has room to raise prices further without impacting demand. Did they continue to increase prices in Q4?

Stock Buybacks: McDonald’s bumped up its stock buyback program in 2022, spending $5 billion to repurchase shares. This helps boost EPS. Will more buybacks be authorized for 2023?

Outlook for 2023

Heading into 2023, analysts remain bullish on McDonald’s growth prospects thanks to its dominant position in the QSR space.

UBS analyst Dennis Geiger rates MCD stock a Buy with a $280 price target, anticipating 7% EPS growth in 2023 fueled by new product innovation like the launch of plant-based burgers [7].

Wells Fargo also maintains an Overweight rating on McDonald’s. They see momentum continuing into 2023 supported by inflation-resistant demand, product launches like adult Happy Meals and Chocolatey Pretzel McFlurrys, and healthy unit growth globally [8].

If McDonald’s delivers another strong quarter and issues an upbeat 2023 forecast, expect the stock to continue its steady upward march. MCD is already up 7% year-to-date in 2023 [9].

With its compelling value proposition and global scale, McDonald’s looks poised to satisfy investor hunger for stable growth amid economic uncertainty. Its Q4 report will provide the latest sign of just how tasty its recipe for continued success is.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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