Will McDonald’s 1Q18 Earnings Boost Its Stock Price?



Stock performance

McDonald’s (MCD) is scheduled to announce its 1Q18 earnings before the market opens on April 30. As of April 20, the company was trading at $158.77, which represents a fall of 10.7% since the announcement of its 4Q17 earnings on January 30.

McDonald’s posted adjusted EPS (earnings per share) of $1.71 on revenues of $5.34 billion last time around. Analysts were expecting the company to post EPS of $1.59 on revenue of $5.23 billion. Although McDonald’s 4Q17 earnings outperformed analysts’ estimates, its stock price declined. Investors worried that customers would trade down to cheaper menu options with the introduction of a new $1 $2 $3 Dollar Menu on January 1. Also, weakness in the broader equity market due to Syrian tension and concerns over the trade war between the United States and China have contributed to a decline in the company’s stock price.

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Year-to-date performance

2017 was good for McDonald’s. Its stock price rose 41.4%. However, the stock price has declined 10.7% since the beginning of 2018. Meanwhile, Wendy’s (WEN), Jack in the Box (JACK), and Starbucks (SBUX) have returned -9.4%, 4.4%, and 1.0%, respectively. Also, the broader comparative indices—the S&P 500 Index (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY)—have returned -0.1% and 4.3%, respectively.

Series overview

With McDonald’s 1Q18 earnings around the corner, we’ll look at analysts’ revenue and EPS estimates. We’ll also cover analysts’ estimates for 2018 in this series. Finally, we’ll look at the company’s valuation multiple and analysts’ recommendations.

First, let’s start by looking at analysts’ 1Q18 revenue in the next part of our series.


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