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McDonald’s Stock Rallies on Strong Q3 2018 Earnings

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Oct. 24 2018, Updated 11:03 a.m. ET

Third-quarter performance

McDonald’s (MCD) posted its third-quarter earnings before the market opened on October 23. For the quarter ended September 30, it reported adjusted EPS of $2.10 on revenues of $5.37 billion. Year-over-year, its adjusted EPS rose 19.3%, and its revenue declined 6.7%.

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Stock performance

Analysts were expecting McDonald’s to post EPS of $1.99 on revenues of $5.32 billion. The company’s global SSSG (same-store sales growth) of 4.2% outperformed analysts’ expectation of 3.6%. However, its SSSG in the United States was in line with analysts’ expectations of 2.4%.

The strong third-quarter performance led to a rise in McDonald’s stock. On Tuesday, it hit a high of $177.87 before closing at $177.15, which represents a rise of 6.3% from its previous day’s closing price.

Year-to-date performance

YTD (year-to-date), McDonald’s has returned 2.9%. During that same period, its peers Starbucks (SBUX) and Wendy’s (WEN) returned 2.4%, and 3.3%, respectively. However, Jack in the Box (JACK) has fallen 22.1% since the beginning of 2018.

The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which has invested 8.1% of its holdings in restaurant and travel companies, has returned 8.2% YTD.

Series overview

In this series, we’ll analyze McDonald’s third-quarter performance and compare it with analysts’ expectations. We’ll also cover analysts’ revenue and EPS expectations for 2018. Finally, we’ll look at analysts’ recommendations and McDonald’s valuation multiples.

Let’s start by looking at analysts’ third-quarter revenue estimates.

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