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Preview: What to Expect From McDonald’s Earnings on Wednesday

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McDonald’s Corp, the largest restaurant chain in the world by sales and the leading burger fast-food chain, is expected to report its third-quarter earnings of $2.46 per share, which represents year-over-year growth of over 10% from $2.22 per share seen in the same period a year ago.

The leading global foodservice retailer would post revenue growth of over 11% to around $6.0 billion.

“We believe a national launch of McPlant at more than 13,000 McDonald’s locations could add as much as $200MM to annual sales for Beyond Meat, boosting its top line by as much as 35%. While McDonald’s claims to be testing the product in only eight restaurants to identify operational challenges, we believe the chances of a national rollout in 2022 is fairly high,” noted Peter Saleh, equity analyst at BTIG.

“We expect Beyond Meat to lean on its balance sheet, investing heavily behind advertising to promote the McPlant and ensuring healthy trial. Assuming McPlant launches nationally in 2022, we believe our 2022 sales forecast for Beyond Meat could prove achievable if not conservative.”

The company will report earnings on Wednesday, October 27 before the market open. McDonald’s shares rose over 11% so far this year. It closed 1.226% lower at $238.44 on Friday.

Analyst Comments

“Best-in-class asset quality, scale in advertising, other areas = structural advantages. Experience of Future (EOTF) reimages enable digital and delivery sales, key to the new strategic plan. ROIC rising and FCF and return of capital to accelerate post ’19, after accounting for Covid-19 disruption,” noted John Glass, equity analyst at Morgan Stanley.

“Refranchising to 95% mostly complete, with operating margins in the mid-40% range, improved FCF and lower earnings volatility. Defensive stock, both in terms of fundamentals and low stock price volatility; better positioned for uncertain demand environment.”

McDonald’s Stock Price Forecast

Twenty-three analysts who offered stock ratings for McDonald’s in the last three months forecast the average price in 12 months of $269.09 with a high forecast of $306.00 and a low forecast of $232.00.

The average price target represents a 12.85% change from the last price of $238.44. From those 23 analysts, 20 rated “Buy”, three rated “Hold”, while none rate “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $266 with a high of $319 under a bull scenario and $184 under the worst-case scenario. The firm gave an “Overweight” rating on the food service retailer’s stock.

Several other analysts have also updated their stock outlook. Deutsche Bank raised the target price to $265 from $264. Citigroup lifted the price target to $260 from $250. UBS upped the target price to $270 from $260.

Check out FX Empire’s earnings calendar

This article was originally posted on FX Empire


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