McDonald’s Prepares to Release Earnings Report: Anticipated Highlights

McDonald’s is gearing up to disclose its fourth-quarter earnings, with Wall Street analysts, surveyed by LSEG (formerly known as Refinitiv), anticipating $2.82 in earnings per share and revenue reaching $6.45 billion. The fast-food giant experienced a robust start to 2023, witnessing double-digit growth in same-store sales and increased foot traffic during the initial half of the year. However, a shift occurred in the third quarter, where McDonald’s reported a notable decline in spending among low-income consumers, resulting in a setback in U.S. restaurant traffic. As the company approaches the fourth quarter, analysts project a continuation of this challenging trend.

Projections suggest that McDonald’s quarterly same-store sales growth will be only 4.7%, a significant drop compared to the 10.9% reported a year earlier. The chain’s previous strategies involving price hikes have slowed down, and the entire industry experienced a dip in foot traffic during the months of November and December.

CEO Chris Kempczinski has also alerted investors to the impact of the Israel-Hamas war on McDonald’s sales, both within the Middle East and some markets beyond it. The company faced calls for a boycott on social media after its Israeli franchisee offered discounts to soldiers. Notably, Starbucks faced similar challenges linked to the Middle East, with U.S. traffic declining as occasional customers reduced visits to its cafes.

Looking ahead to 2024, Wall Street expects McDonald’s to achieve $12.53 per share in earnings, marking a 6.1% increase from the previous year. Revenue is also projected to climb by 6.3%, reaching $27.14 billion.

Despite these headwinds, McDonald’s stock has demonstrated resilience, recording a 12% increase over the past year and achieving a market value of approximately $215 billion. The company’s ability to navigate through the complexities of the fast-food industry, coupled with strategic initiatives, will likely be under scrutiny as investors await the earnings report for insights into the brand’s performance and the effectiveness of its ongoing strategies.