McDonald’s (MCD) shares fall on fourth quarter earnings and revenue

McDonald’s Corporation MCD released its fourth quarter 2021 results, in which earnings and revenue missed Zacks’ consensus estimate. Both metrics were trailing the consensus mark after beating the same for the past three quarters. However, the top and bottom results have improved year by year. Following the results, the company’s shares are down 2.2% in premarket trading.

The robust presence of the drive-thru and its investments in delivery and digitization over the past few years have helped the company amid the pandemic. Robust digitization will continue to help it drive long-term growth and capture market share.

McDonald’s President and CEO Chris Kempczinski said, “We enter the new year with a clear focus on creating seamless and memorable customer experiences and leveraging our momentum to drive long-term sustainable growth. for all our stakeholders.

The company reported adjusted earnings of $2.23 per share, which is below Zacks’ consensus estimate of $2.31. However, net income improved 31% year-over-year.

McDonald’s Corporation Price, Consensus, and EPS Surprise

McDonald’s Corporation price-consensus-eps-surprise-chart | Quote from McDonald’s Corporation

Income and Comps Discusio

For the fourth quarter, revenue was $6,009.1 million, which missed Zacks’ consensus estimate of $6,032 million. The figure rose 13% year-on-year. Revenue benefited from an increase in comparable worldwide sales.

At company-operated restaurants, sales were $2,538.8 million, up 14% year-over-year. The same in franchise-operated restaurants was $3,391.6 million, up 14% year-over-year.

For the quarter under review, the global composition increased by 12.3% compared to a decline of 1.3% in the quarter of the previous year. This is the fourth consecutive quarter of growth for comps, after declining in the previous four quarters.

Strong comps across segments

WE: Earnings in this segment rose 7.5% in the fourth quarter, compared to a gain of 5.5% in the prior year period. The company’s earnings for the quarter benefited from strong average check growth.

International operated markets: Earnings in this segment jumped 16.8% year-on-year, compared with a 7.4% drop in the year-ago quarter.

International development licensed segment: The segment’s comparable sales increased by 14.2% in the fourth quarter. In the prior year quarter, segment comps were down 1.3%.

other information

Cash and cash equivalents at the end of 2021 were $4,709.2 million compared to $3,449.1 million at the end of 2020. Long-term debt at December 31, 2021 was 35 $622.7 million, compared to $35,196.8 million at the end of 2020.

Zacks ranking and key picks

McDonald’s carries a Zacks rank #3 (Hold).

Some higher ranked stocks in the same space include Chuy’s Holdings, Inc. CHUY, Arcos Dorados Holdings Inc. ARCO and First Watch Restaurant Group, Inc. FWRG.

Chuy’s Holdings currently carries a Zacks rank #2 (buy). CHUY has reported better-than-expected earnings in each of the past four quarters, with the average surprise being 52.7%. Shares of CHUY have gained 4.9% over the past month.

Zacks consensus estimate for Chuy’s Holdings current year sales and EPS suggests growth of 23.8% and 115.5%, respectively, over prior year period levels . You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arcos Dorados sports a #1 Zacks rank. ARCO has long-term earnings growth of 42.9%. Shares of the company are up 13.2% over the past three months.

Zacks’ consensus estimate for current-year sales and EPS of Arcos Dorados suggests growth of 31% and 112.5%, respectively, from prior-year period levels.

First Watch Restaurant Group carries a No. 2 Zacks rank. FWRG has long-term earnings growth of 15%. Shares of the company have fallen 15.3% over the past month.

Zacks consensus estimate for First Watch Restaurant Group’s next fiscal year sales and EPS suggests growth of 13.1% and 437.5%, respectively, over prior year period levels .

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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.

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