During the first quarter, McDonald's (MCD, Financial) observed a greater than anticipated decline in consumer sentiment, attributed in part to ongoing geopolitical tensions. This downturn in consumer mood contributed to a more significant reduction in industry traffic than was initially expected. These insights were shared during McDonald's recent Q1 earnings conference call.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 31 analysts, the average target price for McDonald's Corp (MCD, Financial) is $331.39 with a high estimate of $360.00 and a low estimate of $292.00. The average target implies an upside of 3.67% from the current price of $319.65. More detailed estimate data can be found on the McDonald's Corp (MCD) Forecast page.
Based on the consensus recommendation from 39 brokerage firms, McDonald's Corp's (MCD, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for McDonald's Corp (MCD, Financial) in one year is $309.34, suggesting a downside of 3.23% from the current price of $319.65. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the McDonald's Corp (MCD) Summary page.
MCD Key Business Developments
Release Date: February 10, 2025
- Global Comp Sales: Decreased 0.1% for the full year; increased 0.4% in Q4.
- US Comp Sales: Decreased 1.4% in Q4 due to E. coli outbreak impact.
- Adjusted Earnings Per Share (EPS): $2.83 for Q4, a 4% decrease compared to the prior year in constant currencies.
- Adjusted Operating Margin: Just over 46% for the full year.
- Restaurant Margin Dollars: Over $14.5 billion for the year.
- Capital Expenditures (CapEx): Just under $2.8 billion for the year.
- Free Cash Flow Conversion: 81% for the year.
- Cash Returned to Shareholders: $7.7 billion through dividends and share buybacks.
- International Developmental License Segment Comp Sales: Over 4% for the quarter.
- Net Restaurant Expansion Contribution: Slightly over 2% to system-wide sales growth expected in 2025.
- Planned Restaurant Openings for 2025: Approximately 2,200 globally.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- McDonald's Corp (MCD, Financial) saw positive global comp sales growth in Q4 2024, with improvements in guest count performance.
- The company has successfully launched the McValue platform in the US, which is showing promising early results in terms of customer perception and sales.
- International markets like Canada, Germany, and Spain have shown strong performance, with positive guest count and sales growth.
- McDonald's Corp (MCD) is on track with its Accelerating the Arches strategy, focusing on value, affordability, and menu innovation to drive growth in 2025.
- The company is making significant investments in digital and technology platforms, aiming to enhance customer experience and drive sales growth.
Negative Points
- US comp sales were negatively impacted by an E. coli outbreak linked to slivered onions, affecting Q4 2024 performance.
- The company faces ongoing pressure from low-income and family consumer segments, particularly in Europe, affecting overall sales.
- McDonald's Corp (MCD) experienced a decrease in adjusted earnings per share by 4% in constant currencies for Q4 2024.
- The UK market has underperformed due to strong local competition and economic pressures on consumers.
- The company's free cash flow conversion for 2024 was below expectations, impacted by higher capital expenditures and top-line performance pressures.
