What to Expect From McDonald’s Earnings

McDonald’s Corp. (NYSE: MCD) is scheduled to report second-quarter financial results before the markets open on Tuesday. The fast-food giant has been on fire over the past year, but it still remains a solid pick for investors seeking dividends and a degree of safety. Tuesday’s earnings have the potential to solidify this position.

The consensus estimates from Thomson Reuters are calling for $1.38 in earnings per share (EPS) on $6.27 billion in revenue. The same period from last year had $1.26 in EPS on $6.5 billion in revenue.

The company reported outstanding first-quarter results in April, generating higher sales, revenues and operating income in constant currencies across all business segments. Hedge funds are very bullish on the company as a total of 20 own the stock.

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Wall Street as a whole is very pleased with the efforts from new CEO Steve Easterbrook. He has taken the bull by the horns with a strategic corporate reset by changing the menu, updating the hours breakfast is served and modernizing the restaurants. Management prioritized dividend growth as a key element of its shareholder value proposition. McDonald’s has increased its dividend every year for the past 39 years.

Keep in mind that this company is the world’s leading global foodservice retailer, with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local business persons.

A few analysts weighed in on McDonald’s prior to the release of the earnings report:

• RBC Capital Markets reiterated a Buy rating with a $140 price target.
• Wells Fargo reiterated a Market Perform rating.
• Nomura has a Neutral rating with a $129 price target.
• Cowen reiterated a Hold rating.
• JPMorgan has a Buy rating with a $130 price target.

So far in 2016, McDonald’s has outperformed the broad markets with the stock up about 10% year to date. However over the past 52-weeks the stock is actually up as much as 36%.

McDonald’s shares were last trading down about 0.7% at $127.38, with a consensus analyst price target of $130.71 and a 52-week trading range of $87.50 to $131.96.

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