McDonald’s Beats Estimates, Analysts Impressed
2022.04.28 17:37
McDonald’s (MCD) Beats Estimates, Analysts Impressed
McDonald’s (NYSE:MCD) reported Q1 earnings and revenue that topped analyst estimates.
The fast-food giant reported adjusted EPS of $2.28 in the first quarter, up from $1.92 in the year-ago period and above the analyst consensus of $2.17 per share. Revenue came in at $5.67 billion, up 11% YoY and above the estimated $5.57 billion.
Comparable sales were up 11.8% in the quarter, beating the estimated growth of +8.73%. U.S. comparable sales rose by 3.5%, while analysts were expecting +3.59% growth. MCD expects net restaurant unit expansion to add around 1.5% to its 2022 systemwide sales growth.
The company projects the 2022 operating margin to be in the low-to-mid 40% range and expects to add 1,700 – 1,800 new locations globally this year.
MCD expects to open 400 to 500 restaurants in the U.S. and international markets, with developmental licensees and affiliates estimated to contribute capital towards more than 1,300 location openings.
The Q1 financial report takes into account $127 million in pretax operating expenses to prop up its businesses in Russia and Ukraine. The results also include $500 million in non-operating expenses to reserve for a possible settlement related to an international tax matter.
Cowen analyst Andrew Charles says results were “more impressive top line than bottom line to start 2022.”
“We were pleased with in-line U.S. sales in a difficult quick service backdrop while international comps handily beat amid investor concerns on Russia/Ukraine & China. MCD missed adj EPS due to softer U.S. company & franchise margins & other operating expenses that weighed on EPS. We believe MCD’s streamlined focus positions the company well to sustain share gains domestically in 2022,” Charles said in a client note.
Goldman Sachs analyst Jared Garber commented:
“We believe MCD shares will trade higher today on the strong top-line strength, particularly across the IOM segment, but look for incremental color on the growth outlook for SSS trends and the unit growth (in light of the guidance reduction).”
McDonald’s stock price is up nearly 2% today.
By Senad Karaahmetovic
