McDonald’s Corp. (MCD) reported better-than-expected results in the third quarter. The fast food restaurant chain’s adjusted earnings increased by 1% year-over-year to $3.23 per share, above consensus estimates of $3.20 per share.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Furthermore, the company’s revenues grew by 3% year-over-year to $6.9 billion. This surpassed analysts’ expectations of $6.82 billion. However, MCD’s comparable sales declined by 1.5% in the third quarter, worse than Wall Street estimates of a 0.6% drop in comparable sales.
Will MCD’s Revenues Be Impacted by the E. Coli Outbreak?
There is a growing concern among investors about a potential hit to MCD’s U.S. sales following a recent E. coli outbreak linked to McDonald’s Quarter Pounder burgers across 13 states. As of Friday, the outbreak has affected 75 people and resulted in one death involving an older adult.
MCD’s CEO Chris Kempczinski addressed the issue on the company’s earnings call and reassured investors, noting, “While the situation appears to be contained, and though it didn’t affect Q3 numbers, it’s certainly an important development, which I know is on many of your minds.”
Looking forward to the fourth quarter, there remains uncertainty about the impact of the outbreak on U.S. sales, especially as consumers are increasingly picky about where they choose to dine.
MCD Raises Quarterly Dividend
Additionally, McDonald’s raised its quarterly dividend by 6% to $1.77 per share, payable on December 16, 2024. Moreover, the company bought back 1.7 million shares of stock for $444 million.
MCD Issues Outlook
Looking forward, management now expects its net restaurant expansion to contribute around 2% to its systemwide sales growth in FY24 while its operating margin is likely to be in the mid-to-high 40% range. Systemwide sales are defined as sales at all MCD restaurants, whether owned and operated by the company or by franchisees. Moreover, on a global basis, MCD estimates to open more than 2,100 restaurants.
Is MCD Stock a Good Buy Now?
Analysts remain cautiously optimistic about MCD stock, with a Moderate Buy consensus rating based on 17 Buys and 11 Holds. Over the past year, MCD has increased by more than 15%, and the average MCD price target of $314.58 implies an upside potential of 6% from current levels. These analyst ratings are likely to change following MCD’s results today.
