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McDonald's (MCD) to Post Q4 Earnings: What's in the Cards?

Zacks Equity Research
·4-min read

McDonald's Corporation MCD is scheduled to report fourth-quarter 2021 results on Jan 27, 2022, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 12.2%.

How are Estimates Placed?

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $2.31 per share, indicating an improvement of 35.9% from $1.70 reported in the year-ago quarter.

For revenues, the consensus mark is pegged at $6,026 million, suggesting growth of 13.4% from the prior-year quarter’s figure.

McDonald's Corporation Price and EPS Surprise

McDonald's Corporation Price and EPS Surprise
McDonald's Corporation Price and EPS Surprise

McDonald's Corporation price-eps-surprise | McDonald's Corporation Quote

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Let's take a look at how things have shaped up in the quarter.

Factors at Play

McDonald's fourth-quarter top line is likely to reflect a surge in comps on the back of a strong menu, loyalty program, marketing and limited-time promotions. In the previous quarter’s earnings call, the company mentioned witnessing positive comps growth across all day-parts offerings (through October 2021) in the United States. Nevertheless, with increased digital adoption and heightened engagement across drive-thru and delivery, the uptrend is likely to have continued in the fourth quarter as well. For 2021, the company expects system-wide sales growth in the high-teens range.

Robust company-operated restaurants sales and franchise-operated restaurants revenues might have driven the company’s to-be-reported quarter’s performance. The Zacks Consensus Estimate for fourth-quarter company-operated restaurants sales is pegged at $2,528 million, indicating an improvement of 13.2% from the year-ago quarter’s tally. The consensus mark for franchise-operated restaurants revenues is at $3,345 million, suggesting growth of 12% from the prior-year quarter’s reported figure.

A rise in labor and commodity costs is likely to have hurt margins in the fourth quarter. This along with dismal traffic (compared with pre-pandemic levels) and coronavirus-induced supply chain disruptions is likely to have affected the company’s performance in the to-be-reported quarter.

What Our Model Says

Our proven model predicts an earnings beat for McDonald’s this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates.

Earnings ESP: McDonald’s has an Earnings ESP of +0.66%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some other stocks from the Zacks Retail-Wholesale sector that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the quarter to be reported:

Costco Wholesale Corporation COST has an Earnings ESP of +1.30% and a Zacks Rank #2.

Shares of Costco Wholesale have gained 33.1% in the past year. COST’s earnings topped the consensus mark thrice but missed the same on one occasion. The company has a trailing four-quarter earnings surprise of 8.3%, on average.

Yum! Brands, Inc. YUM has an Earnings ESP of +0.62% and a Zacks Rank #3.

Shares of Yum! Brands have gained 18% in the past year. YUM’s earnings topped the consensus mark in each of the trailing four quarters. The company has a trailing four-quarter earnings surprise of 19.8%, on average.

The ONE Group Hospitality, Inc. STKS has an Earnings ESP of +14.29% and a Zacks Rank #3.

Shares of The ONE Group have gained 202.8% in the past year. STKS’ earnings topped the consensus mark thrice but missed the same on one occasion. The company has a trailing four-quarter earnings surprise of 30.9%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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McDonald's Corporation (MCD) : Free Stock Analysis Report

Yum Brands, Inc. (YUM) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

The ONE Group Hospitality, Inc. (STKS) : Free Stock Analysis Report

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Zacks Investment Research