Services

What to Expect When McDonald's Reports Tuesday Morning

Chris Lange

Published: October 22, 2018 11:15 am

Last Updated: January 11, 2020 4:03 pm

McDonald’s Corp. (NYSE: MCD) is scheduled to release its most recent quarterly results Tuesday morning. The consensus estimates from Thomson Reuters call for $1.99 in earnings per share (EPS) and $5.32 billion in revenue. The same period of last year reportedly had $1.76 in EPS and $5.75 billion in revenue.

This 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.

In September, McDonald’s announced that it will raise its quarterly dividend for its common shareholders by 15%, up to $1.16 per quarter. The new $4.64 annualized dividend generates a yield of 2.77%, based on the most recent closing price of $167.49.

McDonald’s has raised its dividends for more than 40 consecutive years, keeping it in with the 25 companies with 40 years of dividend hikes.

McDonald’s did say in its release that the fast-food giant has experienced increased capital allocation flexibility, due to the evolution of its business model and also due to the effects of the Tax Cuts and Jobs Act of 2017.

When companies raise their dividends, it is frequently interpreted as strong conviction that the company can keep on delivering the same or better results years into the future. After all, no company wants to raise its dividend to the point that it has to cut that dividend in the years ahead if there are business cycle changes.

Overall, McDonald’s has underperformed the broad markets, with the stock up less than 1% in the past 52 weeks. In just 2018 alone, the stock is down 2.7%.

A few analysts weighed in on McDonald’s ahead of the report:

• Evercore ISI has an Outperform rating.
• Guggenheim has a Buy rating with a $200 price target.
• Goldman Sachs has a Buy rating and a $192 price target.
• KeyCorp has an Overweight rating with a $185 target.
• Jefferies has a Buy rating with a $190 price target.
• Wells Fargo has a Buy rating and a $185 target price.

Shares of McDonald’s were last seen trading at $167.70, with a consensus analyst price target of $184.85 and a 52-week trading range of $146.84 to $178.70.