McDonald's Corporation Q3 Preview by Deutsche Bank

• Erlinger Joseph M., President of McDonald's USA, sold 939 shares at $315.07 each, impacting his holdings but not necessarily indicating a negative outlook on McDonald's Corporation (NYSE:MCD).
• Despite a slight decline of 0.6% over the past month, McDonald's financial metrics such as a P/E ratio of 27.63 and a price-to-sales ratio of 8.77 are crucial for investors assessing the stock's value and growth prospects.
• The company's debt-to-equity ratio of -15.28 and a current ratio of 1.18 highlight potential concerns and strengths in its financial stability and ability to meet short-term obligations.

On May 23, 2025, Erlinger Joseph M., President of McDonald's USA, sold 939 shares of McDonald's Corporation (NYSE:MCD) at $315.07 each. This transaction leaves him with about 11,161 shares. McDonald's, the world's largest hamburger chain, is a major player in the fast-food industry, competing with companies like Burger King and Wendy's.

Despite its size, McDonald's stock has seen a slight decline of 0.6% over the past month, as highlighted by Zacks Investment Research. This is in contrast to the broader Zacks S&P 500 composite, which increased by 13.4%, and the Zacks Retail - Restaurants industry, which gained 5% during the same period. This performance raises questions about the future direction of MCD stock.

Investors are advised to focus on fundamental factors, such as changes in earnings projections, to assess McDonald's stock prospects. The company has a price-to-earnings (P/E) ratio of 27.63, which is a measure of its current share price relative to its per-share earnings. A higher P/E ratio can indicate that the stock is overvalued or that investors expect high growth rates in the future.

McDonald's financial metrics reveal a price-to-sales ratio of 8.77 and an enterprise value to sales ratio of 10.78. These ratios help investors understand how much they are paying for each dollar of sales. Additionally, the enterprise value to operating cash flow ratio is 29.21, indicating how well the company can generate cash from its operations.

The company's debt-to-equity ratio is -15.28, showing a significant level of debt compared to its equity. This can be a concern for investors, as high debt levels can impact a company's financial stability. However, McDonald's current ratio of 1.18 suggests a relatively balanced level of current assets to current liabilities, indicating that the company can meet its short-term obligations.

McDonald's Corporation (NYSE:MCD) is a global fast-food giant known for its extensive menu and iconic golden arches. As it prepares to release its first-quarter 2025 earnings on May 1, analysts predict an earnings per share (EPS) of $2.64. This represents a 2.2% decline from the previous year's EPS of $2.70, reflecting challenges in customer traffic and economic pressures.

Revenue for the quarter is projected to be $6.08 billion, a 1.4% decrease compared to the same period last year. This decline is largely due to economic pressures affecting low-income consumers, which contributed to a sluggish start to the year, especially in January. Despite these challenges, there has been a slight upward revision of 0.2% in the consensus EPS estimate over the past 30 days, indicating a reassessment by analysts.

McDonald's maintains strong financial fundamentals, supported by its valuable real estate assets. This stability allows the company to manage debt effectively and navigate economic challenges. Despite historical revenue declines, McDonald's has increased its free cash flow by controlling gross margins. However, the current stock price suggests that long-term returns may be modest.

The company's financial metrics provide further insight into its valuation. McDonald's has a price-to-earnings (P/E) ratio of approximately 27.41, indicating the price investors are willing to pay for each dollar of earnings. The price-to-sales ratio stands at about 8.68, reflecting the market's valuation of its revenue. Additionally, the enterprise value to sales ratio is around 10.64, suggesting how the market values the company relative to its sales, including debt and excluding cash.

McDonald's enterprise value to operating cash flow ratio is approximately 29.19, indicating the company's valuation in relation to its cash flow from operations. The earnings yield is about 3.65%, providing insight into the return on investment. The debt-to-equity ratio is notably negative at -13.68, which may indicate a unique financial structure or accounting approach. Lastly, the current ratio is approximately 1.19, suggesting the company's ability to cover its short-term liabilities with its short-term assets.

McDonald's Corporation (NYSE:MCD) is a global fast-food giant known for its extensive menu and iconic golden arches. As it prepares to release its first-quarter 2025 earnings on May 1, analysts predict an earnings per share (EPS) of $2.64. This represents a 2.2% decline from the previous year's EPS of $2.70, reflecting challenges in customer traffic and economic pressures.

Revenue for the quarter is projected to be $6.08 billion, a 1.4% decrease compared to the same period last year. This decline is largely due to economic pressures affecting low-income consumers, which contributed to a sluggish start to the year, especially in January. Despite these challenges, there has been a slight upward revision of 0.2% in the consensus EPS estimate over the past 30 days, indicating a reassessment by analysts.

McDonald's maintains strong financial fundamentals, supported by its valuable real estate assets. This stability allows the company to manage debt effectively and navigate economic challenges. Despite historical revenue declines, McDonald's has increased its free cash flow by controlling gross margins. However, the current stock price suggests that long-term returns may be modest.

The company's financial metrics provide further insight into its valuation. McDonald's has a price-to-earnings (P/E) ratio of approximately 27.41, indicating the price investors are willing to pay for each dollar of earnings. The price-to-sales ratio stands at about 8.68, reflecting the market's valuation of its revenue. Additionally, the enterprise value to sales ratio is around 10.64, suggesting how the market values the company relative to its sales, including debt and excluding cash.

McDonald's enterprise value to operating cash flow ratio is approximately 29.19, indicating the company's valuation in relation to its cash flow from operations. The earnings yield is about 3.65%, providing insight into the return on investment. The debt-to-equity ratio is notably negative at -13.68, which may indicate a unique financial structure or accounting approach. Lastly, the current ratio is approximately 1.19, suggesting the company's ability to cover its short-term liabilities with its short-term assets.

McDonald’s (NYSE:MCD) shares rose more than 4% intra-day today after delivering better-than-expected comparable sales in the fourth quarter, with strong performance in international markets helping to offset weaker demand in the U.S. Despite slowing growth, the fast-food giant exceeded analyst expectations, driven by strength in the Middle East and Japan.

For the quarter, global same-store sales increased by 0.4%, a sharp slowdown from the 3.4% growth seen a year earlier. While consumer demand in the U.S. remained sluggish, the figure outpaced analyst projections, which had anticipated a decline of nearly 1%.

Internationally, McDonald’s saw a notable boost from its licensed markets, where same-store sales jumped 4.1%, far exceeding both last year’s modest 0.7% growth and expectations for a decline. The company highlighted strong demand in key regions such as Japan and the Middle East, which contributed significantly to the segment’s outperformance.

In response to shifting consumer spending, McDonald’s has been rolling out more budget-friendly menu options to attract price-conscious customers. This comes as the company works to recover from an E. coli outbreak last year, which impacted customer traffic and confidence. Leadership has reaffirmed its commitment to food safety and rebuilding trust, emphasizing efforts to regain momentum in the U.S. market.

On the financial side, total revenue for the quarter dipped slightly by 0.3% year-over-year to $6.39 billion, missing analyst estimates of $6.45 billion. However, operating income rose 2.4% to $2.87 billion, reflecting operational resilience despite the sales slowdown.

As McDonald’s navigates a challenging consumer landscape, international strength and strategic pricing adjustments will be key to driving future growth.

McDonald’s (NYSE:MCD) shares rose more than 4% intra-day today after delivering better-than-expected comparable sales in the fourth quarter, with strong performance in international markets helping to offset weaker demand in the U.S. Despite slowing growth, the fast-food giant exceeded analyst expectations, driven by strength in the Middle East and Japan.

For the quarter, global same-store sales increased by 0.4%, a sharp slowdown from the 3.4% growth seen a year earlier. While consumer demand in the U.S. remained sluggish, the figure outpaced analyst projections, which had anticipated a decline of nearly 1%.

Internationally, McDonald’s saw a notable boost from its licensed markets, where same-store sales jumped 4.1%, far exceeding both last year’s modest 0.7% growth and expectations for a decline. The company highlighted strong demand in key regions such as Japan and the Middle East, which contributed significantly to the segment’s outperformance.

In response to shifting consumer spending, McDonald’s has been rolling out more budget-friendly menu options to attract price-conscious customers. This comes as the company works to recover from an E. coli outbreak last year, which impacted customer traffic and confidence. Leadership has reaffirmed its commitment to food safety and rebuilding trust, emphasizing efforts to regain momentum in the U.S. market.

On the financial side, total revenue for the quarter dipped slightly by 0.3% year-over-year to $6.39 billion, missing analyst estimates of $6.45 billion. However, operating income rose 2.4% to $2.87 billion, reflecting operational resilience despite the sales slowdown.

As McDonald’s navigates a challenging consumer landscape, international strength and strategic pricing adjustments will be key to driving future growth.

McDonald's Corporation (NYSE:MCD) is a global leader in the fast-food industry, known for its iconic golden arches and a menu that includes favorites like the Big Mac and McNuggets. The company operates thousands of restaurants worldwide, competing with other fast-food giants like Burger King and Wendy's. McDonald's is set to release its quarterly earnings on February 10, 2025, with analysts estimating an EPS of $2.84 and revenue of $6.48 billion.

The upcoming earnings report for the fourth quarter of 2024 is highly anticipated. Analysts expect McDonald's to report an EPS of $2.81, a 4.8% decline from the previous year. Despite this, revenue is projected to rise by 1.1% to $6.48 billion, driven by digital adoption, new menu items, and unit expansion. These factors have helped bolster the company's revenue, even as earnings face pressure.

Over the past month, the consensus EPS estimate has been revised downward by 1.3%. Such revisions are significant as they often signal potential investor actions and can impact the stock's short-term price performance. Investors will be keen to see if McDonald's can exceed these expectations, as a positive surprise could boost the stock price, while a miss might lead to a decline.

McDonald's financial metrics provide insight into its market valuation. The company has a P/E ratio of 25.59, indicating investor willingness to pay for its earnings. Its price-to-sales ratio is 8.13, reflecting the market's valuation of its revenue. The enterprise value to sales ratio is 10.14, and the enterprise value to operating cash flow ratio is 28.28, offering perspectives on the company's valuation relative to sales and cash flow.

The company's earnings yield is approximately 3.91%, providing a view of the return on investment. However, McDonald's has a debt-to-equity ratio of -10.32, indicating a higher level of debt compared to equity. The current ratio is 0.78, showing its ability to cover short-term liabilities with short-term assets. These financial metrics will be closely watched as the earnings report approaches.

McDonald's Corporation (NYSE:MCD) is a global leader in the fast-food industry, known for its iconic golden arches and a menu that includes favorites like the Big Mac and McNuggets. The company operates thousands of restaurants worldwide, competing with other fast-food giants like Burger King and Wendy's. McDonald's is set to release its quarterly earnings on February 10, 2025, with analysts estimating an EPS of $2.84 and revenue of $6.48 billion.

The upcoming earnings report for the fourth quarter of 2024 is highly anticipated. Analysts expect McDonald's to report an EPS of $2.81, a 4.8% decline from the previous year. Despite this, revenue is projected to rise by 1.1% to $6.48 billion, driven by digital adoption, new menu items, and unit expansion. These factors have helped bolster the company's revenue, even as earnings face pressure.

Over the past month, the consensus EPS estimate has been revised downward by 1.3%. Such revisions are significant as they often signal potential investor actions and can impact the stock's short-term price performance. Investors will be keen to see if McDonald's can exceed these expectations, as a positive surprise could boost the stock price, while a miss might lead to a decline.

McDonald's financial metrics provide insight into its market valuation. The company has a P/E ratio of 25.59, indicating investor willingness to pay for its earnings. Its price-to-sales ratio is 8.13, reflecting the market's valuation of its revenue. The enterprise value to sales ratio is 10.14, and the enterprise value to operating cash flow ratio is 28.28, offering perspectives on the company's valuation relative to sales and cash flow.

The company's earnings yield is approximately 3.91%, providing a view of the return on investment. However, McDonald's has a debt-to-equity ratio of -10.32, indicating a higher level of debt compared to equity. The current ratio is 0.78, showing its ability to cover short-term liabilities with short-term assets. These financial metrics will be closely watched as the earnings report approaches.