McDonald’s (MCD) to Release Fourth Quarter Results: What’s on the Cards?

McDonald’s Corporation MCD must report fourth quarter 2021 results on January 27, 2022, before the opening bell. In the last reported quarter, the company recorded a surprise profit of 12.2%.

How are the ratings placed?

Zacks’ consensus estimate for fourth-quarter earnings is pegged at $2.31 per share, indicating a 35.9% improvement from the $1.70 reported in the year-ago quarter.

For revenue, the consensus mark is pegged at $6,026 million, suggesting 13.4% growth over the year-ago quarter figure.

McDonald’s Corporation award and EPS surprise

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

Let’s see how things have evolved over the quarter.

Factors at play

McDonald’s fourth-quarter revenue will likely reflect increased rewards thanks to a strong menu, loyalty program, marketing and limited-time promotions. During the prior quarter’s earnings call, the company mentioned seeing positive growth in clearings for all daytime tranche offerings (through October 2021) in the United States. Nevertheless, with increased digital adoption and increased engagement in drive-thru and delivery, the upward trend is also expected to continue in the fourth quarter. For 2021, the company expects system-wide sales growth in the teen segment.

Robust sales from company-operated restaurants and revenue from franchise-operated restaurants may have driven the company’s quarterly reportable performance. Zacks’ consensus estimate for company-operated restaurant sales in the fourth quarter is set at $2,528 million, indicating a 13.2% improvement over the year-ago quarter tally . The consensus mark for franchise-operated restaurant revenue is $3,345 million, suggesting growth of 12% over the reported figure for the prior year quarter.

Rising labor and raw material costs likely hurt margins in the fourth quarter. This, combined with dismal traffic (compared to pre-pandemic levels) and coronavirus-induced supply chain disruptions, likely affected the company’s performance in the quarter ahead.

What our model says

Our proven model predicts higher profits for McDonald’s this time around. An action must have a positive effect ESP Earnings and a Zacks rank #1 (strong buy), 2 (buy) or 3 (hold) to beat the estimates.

ESP Earnings: McDonald’s has an ESP on earnings of +0.66%. You can discover the best stocks to buy or sell before they’re flagged with our Income ESP filter.

Zack’s Ranking: The company has a Zacks rank #3. You can see the full list of today’s Zacks #1 Rank stocks here.

Stocks are poised to beat earnings estimates

Here are some other actions of the Zacks wholesale retail sector that investors can consider as our model shows that these have the right mix of elements to post a beat in earnings in the quarter to report:

Costco Wholesale Corporation COST has a +1.30% win ESP and a #2 Zacks rank.

Costco Wholesale shares have gained 33.1% over the past year. COST earnings exceeded the consensus mark on three occasions, but missed the same on one occasion. The company has an earnings surprise for the last four quarters of 8.3% on average.

Yum! Marks, Inc. YUM has a +0.62% win ESP and a #3 Zacks rank.

Shares of Yum! Brands gained 18% last year. YUM’s earnings have exceeded the consensus mark in each of the past four quarters. The company has a surprise on earnings for the last four quarters of 19.8% on average.

The ONE Group Hospitality, Inc. STKS has a +14.29% earnings ESP and a #3 Zacks rank.

Shares of The ONE Group have gained 202.8% over the past year. Earnings for STKS topped the consensus mark on three occasions, but missed the same on one occasion. The company has an earnings surprise for the last four quarters of 30.9% on average.

Stay up to date with upcoming results announcements with the Zacks Earnings Schedule.

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McDonald’s Corporation (MCD): Free Inventory Analysis Report

Yum Brands, Inc. (YUM): Free Stock Analysis Report

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The ONE Group Hospitality, Inc. (STKS): Free Inventory Analysis Report

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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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