What to expect from McDonald’s Stock Post Q4?
McDonald’s action (NYSE:MCD)a restaurant chain made up of more than 40,000 mostly franchised stores, is expected to report its fiscal fourth quarter results on Tuesday, January 31. We expect MCD stock to likely see little to no movement, with revenue nearly in line, but earnings slightly missing expectations in the fourth quarter results. The weakening of all major currencies against the US dollar has also been a major headwind for McDonald’s in fiscal 2022 so far, and the company expects this to also impact fourth quarter earnings. Additionally, rising costs also continue to strain restaurant operating margins, necessitating price increases to offset inflation. In the third quarter, the company’s operating profit margin fell from the rate of nearly 50% set by the company a year ago to 39% currently, thanks to rising costs. Additionally, the company says China has been a difficult operating environment due to ongoing Covid-19 infections. However, McDonald’s was able to offset China’s dismal sales with strong international revenues in Brazil and Japan, where licensees operate McDonald’s stores.
Our forecast indicates that McDonald’s valuation is $274 per share, which is in line with the current market price. Watch our interactive dashboard analysis at Overview of McDonald’s revenue: What to expect in the fourth quarter of the fiscal year? for more details.
(1) Expected revenue almost in line with consensus estimates
Trefis estimates McDonald’s Q4 2022 revenue at around $5.7 Has been, almost in line with the consensus estimate. In the third quarter, McDonald’s revenue fell 5% year-on-year to $5.9 billion, due to currency headwinds. In terms of same-store sales, the United States grew by 6.1% in the third quarter, thanks to price increases and promotions. Internationally, comparable store sales growth was a more impressive 8.5%. In international licensed markets, same-store sales jumped a remarkable 16.7%, even taking into account lower sales in China. In the United States alone, McDonald’s has more than 25 million active members of its digital rewards program, contributing to a total of more than 43 million active users worldwide. We plan McDonald’s Revenue to $23 billion in fiscal 2022, down slightly year-over-year.
2) EPS is likely to slightly miss consensus estimates
McDonald’s Q4 2022 earnings per share (EPS) is expected to come in at $2.43 per Trefis analysis, slightly missing the consensus estimate. In the third quarter, MCD’s net income fell 6% year-on-year to $2.68, due to rising costs.
(3) Estimation of stock price in line with current market price
Passing through our McDonald’s Ratingwith an estimated EPS of around $9.99 and a P/E multiple of 27.5x for FY2022, this translates to a price of $274, which is almost in line with the current market price.
It helps to see how your peers compare. MCD Peers shows how McDonald’s shares compare to those of their peers on important metrics. You can find other useful comparisons for companies in all industries on Peer Comparisons.
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| Return | Jan 2023 MTD [1] |
2023 YTD [1] |
2017-23 Total [2] |
| Back MCD | 4% | 4% | 126% |
| S&P 500 return | 6% | 6% | 81% |
| Trefis Multi-Strategy Portfolio | ten% | ten% | 246% |
[1] Monthly and cumulative total as of 01/27/2023
[2] Cumulative total returns since the end of 2016
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
What to expect from McDonald’s Stock Post Q4?
