McDonald's Q4 Earnings Preview: Underperformance, E. coli Outbreak Weigh

McDonald's (MCD) investors endured a lackluster 2024 marked by stock underperformance, weak sales, and an E. coli outbreak. Analysts anticipate further challenges in Q4, with same-store sales projected to decline 0.91% year-over-year. International markets are expected to drive this drop, with an estimated 1.22% decrease.

Despite revenue projections of $6.45 billion, earnings per share are forecast at $2.84, reflecting a decline from the previous year. To reverse this trend, McDonald's plans to roll out a McValue menu and introduce new chicken items and snack wraps in 2025.

Earnings Preview Breakdown:

Q4 Estimates (Bloomberg Consensus):

* Revenue: $6.45 billion vs. $6.41 billion
* Adjusted EPS: $2.84 vs. $2.95
* Global Same-Store Sales Growth: -0.91% vs. +3.40%
* US Same-Store Sales Growth: -0.35% vs. +4.30%
* International-Owned Same-Store Sales Growth: -1.22% vs. 4.40%
* International Franchised Same-Store Sales Growth: -0.38% vs. 0.70%

Fiscal 2024 Estimates (Bloomberg Consensus):

* Revenue: $25.99 billion vs. $25.49 billion
* Adjusted EPS: $11.74 vs. $11.94
* Global Same-Store Sales Growth: -0.39% vs. +9.00%
* US Same-Store Sales Growth: +0.44% vs. +8.70%
* International-Owned Same-Store Sales Growth: -0.50% vs. 9.20%
* International Franchised Same-Store Sales Growth: -1.39% vs. 9.40%

McValue Menu Performance:

Despite optimism, the McValue menu has yet to drive significant foot traffic due to unfavorable weather conditions in January. TD Cowen analyst Andrew Charles will monitor company-operated store margins for the impact of value offerings.

Franchise Concerns:

Franchise operators are concerned about overdependence on promotions, with discounts and free offerings accounting for a substantial portion of sales. This raises concerns about profitability and the ability to wean consumers off discounted items.

Analyst Outlook:

Analysts maintain a cautious outlook for McDonald's, citing back-loaded performance in 2025 and challenges in the first half. However, positive recovery in the second half is anticipated due to easier comparisons.