Expectations for 2018
Analysts expect McDonald’s (MCD) to post adjusted EPS (earnings per share) of $7.58 in 2018, which represents 13.6% growth from its EPS of $6.67 in 2017. EBIT (earnings before interest and tax) margin expansion, a lower effective tax rate, and share repurchases are expected to drive the company’s EPS in 2018.
In 2018, McDonald’s EBIT margin is expected to be 43.0%, compared with 38.8% in 2018. Higher revenue from franchised restaurants, sales leverage due to positive SSSG (same-store sales growth), and lower G&A (general and administrative) expenses are expected to drive the company’s EBIT margin. In 2018, the company expects a tax rate of 25%–27%. In 2017, the company’s effective tax rate was 39.4%.
In 2017, the company repurchased 31.4 million shares for approximately $4.6 billion. The company expects to return $16.3 billion to shareholders through share repurchases and dividends in 2018 and 2019. Share repurchases lower the number of shares outstanding, boosting a company’s EPS. Management expects its 2018 EPS to be boosted by currency transactions by $0.23–$0.25.