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McDonald’s Earnings: Seasonality And Other Factors



McDonald’s earnings analysis

So far in this series, we’ve covered McDonald’s (MCD) revenues, same-store sales growth, unit growth, segment performance, and expectations for the upcoming earnings release coming January 23.


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McDonald’s earnings analysis

Earnings before interest, tax, depreciation, and amortization, or EBITDA, is the purest measure of a company’s revenue performance in any given financial period.

Looking at the chart above, you can see how the EBITDA demonstrates the seasonality in the business, with the first quarter being the lowest of all other quarters. Wall Street analysts’ estimated EBITDA for the first quarter of 2014 was $2.3 billion, compared to $2.6 billion in 4Q13.

The EBITDA margins are expected to drop to 35.5% compared to 38.3%.

Seasonality and other factors affecting restaurants

It’s not just seasonality that makes restaurant revenues volatile. We saw restaurants reporting lower sales in the first half of 2014 because of adverse weather conditions in the US. There are also macroeconomic factors that affect sales for restaurants such as McDonald’s (MCD), Dunkin’ Brands (DNKN), and Yum! Brands (YUM). These factors in turn affect the Consumer Discretionary Select Sector SPDR Fund (XLY), which also holds Chipotle Mexican Grill (CMG).

As mentioned previously in this series, McDonald’s is one of the companies that reports monthly same-store sales data. Its stock increased 1.4% since its previous earnings release. We’ll wrap up this series with the key numbers you should look for when McDonald’s releases its earnings.


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