McDonald's stock expected to beat Q2 revenue and earnings estimates with long-term potential

From Nasdaq: 2024-07-28 21:01:18

McDonald’s stock (MCD) is set to report its Q2 results, with expectations of beating revenue and earnings estimates. The stock has declined from $297 to $251 this year, impacted by rising costs and consumer pushback on menu price increases. Despite challenges, MCD remains a solid bet with strong long-term potential at a valuation of 21x forward P/E ratio.

MCD stock has shown gains of 25% over 3 years, but underperformed the S&P in 2023. Consistently beating the market has been a challenge for individual stocks. The High Quality Portfolio, with 30 stocks, has consistently outperformed the S&P, offering better returns with less risk. Uncertainty remains regarding MCD’s performance in the current economic environment.

Revenue for Q2 is forecasted to exceed consensus estimates, with a y-o-y growth of 5%. Despite facing challenges in some international markets, MCD expects strong capital expenditures for new restaurant unit expansion. Franchise rental income offers inflation-resistant revenue for the company. EPS is expected to marginally beat estimates in Q2, with a stock price estimate 11% higher than the current market price.

The total returns for MCD in July 2024 are -1%, YTD -14%, and from 2017-2024, a total of 147%. Comparatively, the S&P 500 had returns of -1% in July 2024, YTD 14%, and a total of 142% from 2017-2024. The Trefis Reinforced Value Portfolio shows cumulative total returns since 2016, outperforming both MCD and the S&P.



Read more at Nasdaq: Down 14% YTD, What Lies Ahead For McDonald’s Stock Following Q2 Earnings?