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McDonald’s: Investors Are Optimistic before Its 2Q17 Earnings

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Stock performance

McDonald’s (MCD) will announce its 2Q17 earnings before the market opens on July 25, 2017. Since the announcement of its 1Q17 earnings on April 25, 2017, the company’s stock price has risen 15.5%.

McDonald’s management improved the quality of its menu items, enhanced customers’ experience through digital advancement and delivery services, and provided menu innovations, which increased investors’ confidence. Better-than-expected 1Q17 earnings and stock upgrades by analysts likely led to the rise in McDonald’s stock price. In 1Q17, McDonald’s outperformed analysts’ estimates by posting an adjusted EPS (earnings per share) of $1.47 on revenues of $5.68 billion. For more detailed analysis of McDonald’s 1Q17 performance, read McDonald’s Supersize 1Q17.

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YTD performance

It’s important to note that 2017 continues to be a good year for McDonald’s. Its stock has risen 27.4% YTD (year-to-date). During the same period, Jack in the Box (JACK), Wendy’s (WEN), and Restaurant Brands International (QSR) have returned -14.7%, 15.7%, and 29.1%, respectively.

The iShares Select Dividend ETF (DVY) and the S&P 500 Index (SPX) have returned 3.5% and 9.3%, YTD, respectively.

Series overview

With McDonald’s 2Q17 earnings around the corner, we’ll look at analysts’ expectations for 2Q17. We’ll also discuss management’s guidance for 2017 and analysts’ revenue and EPS estimates for the next four quarters.  Finally, we’ll look at McDonald’s valuation multiple and analysts’ recommendations.

First, we’ll discuss analysts’ revenue estimates for 2Q17.

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