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McDonald's (MCD) Q1 Earnings & Revenues Surpass Estimates

Zacks Equity Research

McDonald's Corporation MCD reported impressive first-quarter 2019 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Following the quarterly results, shares of the company gained 2.5% during pre-market trading session.

Adjusted earnings came in at $1.78 per share, which surpassed the consensus mark of $1.73. However, the metric witnessed a marginal decline of 0.6% from the prior-year quarter number. Meanwhile, foreign currency translation had a negative impact of 9 cents per share on earnings in the quarter under review.

Revenues Decline But Global Comps Improve

In the first quarter, revenues of $4,955.6 million outpaced the Zacks Consensus Estimate of $4,911 million but decreased 4% year over year. This downturn reflects the impact of the company’s strategic refranchising initiatives. However, on a constant-currency basis, the metric increased 2% on a year-over-year basis.

At company-operated restaurants, revenues decreased 12% year over year to $2,240.5 million. However, the same at franchise-operated restaurants improved 4% to $2,715.1 million.

Global comps grew 5.4% driven by positive comparable sales across all segments. Notably, this marked the fifteenth consecutive quarter of positive comparable sales. In the fourth quarter of 2018, comps were up 4.4%.

McDonald's Corporation Price, Consensus and EPS Surprise

McDonald's Corporation Price, Consensus and EPS Surprise | McDonald's Corporation Quote

Solid Comps Across Segments

U.S.: Comps at this segment grew 4.5% in the first quarter, higher than a 2.3% rise in the prior quarter. This uptick was driven by successful promotions of the Bacon Event, the 2 for $5 Mix and Match deal, and Donut Sticks.

Segment operating income declined 5% due to decline in sale of restaurant businesses and decrease in company-operated margin dollars.

International Lead Markets: Comps at this segment rose 6% year over year, higher than a 5.2% rise registered in the last reported quarter. Robust sales in the United Kingdom, France and positive results across all markets drove comps.

Operating income was flat year over year, including the impact of foreign currency translation. At constant currency, the figure increased 8%. This upside can be attributed to sales-driven improvements in franchised margin dollars.

International Developmental Licensed Segment: The segment’s comparable sales increased 6% during the first quarter owing to robust sales performance across all geographic regions.

Other Information

McDonald's returned $1.9 billion to its shareholders via stock repurchase and dividends. In 2019, the company expects to return nearly $9 billion to its shareholders.

Zacks Rank & Peer Releases

McDonald's carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden DRI reported third-quarter fiscal 2019 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $1.80 per share beat the Zacks Consensus Estimate of $1.75. The bottom line also increased 5.3% year over year on the back of higher revenues.

Chipotle CMG reported better-than-expected results in the first quarter of 2019. Adjusted earnings of $3.40 per share outpaced the Zacks Consensus Estimate of $3.01 by 13%. The bottom line also grew 59.6% from the year-ago quarter figure backed by increased revenues and lower food costs.

Domino’s DPZ reported mixed first-quarter 2019 financial numbers, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of $2.20 per share exceeded the Zacks Consensus Estimate of $2.07 and increased 10% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.

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