Can McDonald’s Beat Wall Street Estimates of 9% Revenue Gains for the Quarter?

Quick overview

Investment firms are betting that McDonald’s (MCD) will report their Q1 revenue was up 8.9% compared to the previous Q1 report, but the company’s stock price has been falling for days.

McDonald’s earnings report may go worse than expected. Even though Wall Street expects the company to show a revenue increase of almost 9% for the quarter year over year, investors are hesitating on the stock, bringing the price down 0.23% the day before the earnings report is released.

The company should report earnings per share of around $2.75, which would mean that their EPS is up by 3% compared to the same time last year. If they can manage what Wall Street expects, then they will report earnings of $6.49 billion for the first fiscal quarter of the year.

McDonald’s Earnings Target Increased, but Stock Remains Low

It is unlikely that the MCD stock will react very positively to the upcoming earnings report. The most recent consensus for EPS was increased recently, and yet the stock remains bearish and well below its highs from the previous months. MCD stock seriously needs a boost in order to get back on track, and even this Q1 report might not do it.

Analysts say to hold on McDonald’s stock in the hopes that it may recover and in fear that the recovery will not come anytime soon. In the last month, the stock has fallen more than 2%, and the trajectory does not appear to be changing for now. The best that investors can hope for from the Q1 report is that McDonald’s stock may level out and begin to stabilizing rather than continue plummeting.

Over the past year, McDonald’s has worked to reduce costs and boost sales. They are doing this by getting rid of self-serve drinks in some locations and adding $3 value menu items. The company is also cutting prices on combo meals to drive sales after their CEO said that the menu prices are simply too high to attract customers.

There is concern even within the company that McDonald’s is losing the perception of value that many customers used to have for the chain. The high cost of combo meals has been the company’s attempt to keep up with inflation, and the CEO wrote an open letter telling customers that the company has not raised their prices faster than inflation. Is the problem of poor perceived value enough to keep the stock price down and drive value-minded customers away? We will see when the company releases their quarterly earnings on May 6^th.

ABOUT THE AUTHOR See More

Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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