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McDonald’s Q4 EPS Beat Analysts’ Expectations

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Fourth-quarter performance

For the fourth quarter, McDonald’s (MCD) posted an EPS of $1.82. Removing one-time or special items, the company’s adjusted EPS was $1.97, which outperformed analysts’ expectation of $1.89.

McDonald’s adjusted EPS grew 15.2% YoY (year-over-year) due to the expanded EBIT margin, lower effective tax rate, and share repurchases. For the fourth quarter, McDonald’s effective tax rate was 19.2%—compared to 62.9% in the fourth quarter of 2017, which contributed to the company’s EPS growth.

Moving to share repurchases, McDonald’s repurchased 32.2 million shares for $5.2 billion in 2018. Share repurchases lower the number of shares outstanding and drive the company’s EPS.

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Peer comparisons

During the same period, Starbucks’s (SBUX) adjusted EPS rose 17.2%. Analysts expect Wendy’s (WEN) and Jack in the Box (JACK) to post EPS growth of 36.3% and 4.6% during the same period, respectively.

Dividends

McDonald’s management has announced quarterly dividends of $1.16 per share—a rise of 14.9% from $1.01 in the previous quarter. The declared dividends will be distributed on March 15 to shareholders recorded as of March 1.

As of January 30, McDonald’s dividend yield was 2.55%. McDonald’s stock price was trading at $181.77. On the same day, Starbucks, Wendy’s, and Jack in the Box’s dividend yields were at 2.11%, 1.96%, and 1.97%, respectively.

Next, we’ll discuss analysts’ expectations in 2019.

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