Can 2Q16 Results Drive McDonald’s Share Price?



MCD’s stock performance

The Illinois-based hamburger giant McDonald’s (MCD) is scheduled to announce its 2Q16 results before the market opens on July 26. In 2015, the company’s stock delivered an impressive return of 26.7%. On a year-to-date basis, the stock has risen 4.6%.

Since the announcement of 1Q16 results, McDonald’s share price has fallen 1.6%. During the same period, its peers Jack in the Box (JACK) and Restaurant Brands International (QSR) have returned 30.6% and 6.8% while Wendy’s Company (WEN) has declined 13.2%.

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Although McDonald’s reported better-than-expected 1Q16 results, the deceleration in same-store sales growth in the US burger industry led to a decline in MCD’s share price. Despite initiatives like testing fresh beef, analysts believe McDonald’s could find it difficult to improve same-store sales growth, especially in 3Q16 and 4Q16, when it come up against tough 3Q15 and 4Q15 comparisons. This concern has also contributed to a decline in McDonald’s share price.

Series overview

This pre-earnings series will explore what we can expect from McDonald’s 2Q16 earnings release. The series covers analysts’ estimates for revenue, EBIT (earnings before interest and tax) margins, and earnings per share. To wrap up this series, we’ll look at the company’s valuation multiple and the expected stock price over the next 12 months.

Let’s start by discussing McDonald’s estimated revenue for 2Q16.


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