McDonald’s (MCD) posted its 1Q17 results on April 25, 2017, reporting EPS (earnings per share) of $1.47 and revenues of $5.68 billion. Its EPS rose 19.4% on a YoY (year-over-year), while its revenue fell 3.9%.
Analysts were expecting MCD to post EPS of $1.33 on revenues of ~$5.5 billion. They had forecasted the company’s global SSSG (same-store sales growth) would be 1%. However, the expansion of the company’s All Day Breakfast, Big Mac promotion, and beverage value offerings helped the company outperform the analysts’ estimates with global SSSG of 4%.
The better-than-expected 1Q17 earnings and strong SSSG both appear to have increased investor confidence, helping the stock hit a new 52-week high of $142 on April 26, 2017. The stock closed the day at $140.84, representing a rise of 4.9% since the announcement of MCD’s 1Q17 earnings.
Fiscal 2016 was not a good year for McDonald’s, but it has started 2017 on a good note. Since the beginning of 2017, the company’s stock has returned 15.7%. During the same period, peers Jack in the Box (JACK), Wendy’s (WEN), and Restaurant Brands International (QSR) have returned -9.0%, 9.3%, and 18.9%, respectively.
By comparison, the S&P 500 INDEX (SPX) and the iShares US Consumer Services ETF (IYC) have returned 6.6%, and 9.5%, respectively, YTD (year-to-date). Notably, IYC has 11.6% of its portfolio holdings in travel and restaurants companies.
In this series, we’ll discuss McDonald’s 1Q17 performance and look at the analysts’ estimates for the next four quarters. We’ll also examine McDonald’s valuation multiple and the analysts’ updated recommendations.
We’ll start with McDonald’s 1Q17 revenue.