Services

McDonald's Earnings Foreshadow More Weakening

McDonald's Big Mac Value Meal
courtesy of McDonald's
McDonald’s Corp. (NYSE: MCD) reported third-quarter 2013 results before markets opened Monday morning. The fast-food restaurant chain posted diluted earnings per share (EPS) of $1.52 on revenues of $7.32 billion. In the same period a year ago, the company reported EPS of $1.43 on revenues of $7.15 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.51 EPS and $7.34 billion in revenues.

Globally, same-store sales in the second quarter rose 0.9% and consolidated net income rose 2%. Same-store sales rose 0.7% in the United States, were up 0.2% in Europe and fell by 1.4% in Asia. Sequentially, U.S. same-store sales were off by 0.1% and Asian sales were off by 1.1%. Europe grew sales by 0.3%.

McDonald’s increased its dividend by 5% in mid-September to a quarterly total of $0.81, effective in the fourth quarter.

The company’s CEO said:

While we are focused on strengthening our near-term performance, the current environment continues to pressure results. Around the world, we remain confident in our ability to drive sustained, long-term profitable growth through our global growth priorities — optimizing the menu, modernizing the customer experience and broadening accessibility.

McDonald’s did not offer guidance in its earnings press release. The company did say that it expects fourth-quarter sales to be “in-line with recent quarterly trends while restaurant margin percentages are expected to decline at a level relatively similar to first quarter results.” The company expects October same-store sales to be flat with last year.

The consensus estimates for the second quarter calls for EPS of $1.45 on revenues of $7.2 billion. The current full-year forecast calls for EPS of $5.60 on revenues of $28.23 billion.

McDonald’s shares were down 1.7% in premarket trading Monday morning, at $93.57 in a 52-week range of $83.31 to $103.70. Thomson Reuters had a consensus analyst price target of around $105.10 before this report.

Sponsored: Attention Savvy Investors: Speak to 3 Financial Experts – FREE

Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free.Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.