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Has McDonald’s Stock Price Bottomed Out?

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Mar. 12 2018, Published 1:32 p.m. ET

Stock performance

By the end of March 9, 2018, McDonald’s (MCD) was trading at $157.24, which represents a fall of 11.5% since the announcement of its 4Q17 earnings on January 30, 2018.

In 4Q17, McDonald’s posted adjusted EPS (earnings per share) of $1.71 on revenue of $5.34 billion, against analysts’ EPS estimate of $1.59 and revenue estimate of $5.23 billion. Despite posting strong 4Q17 earnings, the company saw its stock price fall as investors were worried about more customers opting for cheaper menu options with the introduction of McDonald’s $1 $2 $3 Dollar Menu on January 1. McDonald’s stock fell to $146.84 on March 2, 2018.

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Year-to-date performance

After returning 41.4% in 2017, McDonald’s stock has fallen 8.6% since the beginning of 2018. Weakness in the broader equity market due to fear of the Fed hiking interest rates and confusion over the imposition of tariffs on steel and aluminum has also contributed to company’s stock price falling. During the same period, peers Wendy’s (WEN), Jack in the Box (JACK), and Restaurant Brands International (QSR) have returned 6.7%, -8.8%, and -3.5%, respectively. The broader comparative S&P 500 (SPX) and Consumer Discretionary Select Sector SPDR ETF (XLY) have risen 4.2% and 7.7%.

Series overview

In this series, we’ll look at analysts’ revenue and EPS estimates for McDonald’s in the next four quarters, and management’s guidance for 2018. We’ll end the series by looking at analysts’ recommendations. Let’s start by looking at McDonald’s 2018 revenue.

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