Cheap Burgers Are Still Selling, Just Not At McDonald’s

 | Jan 22, 2017 12:22AM ET

McDonald’s Corporation (NYSE:MCD)

Consumer Discretionary - Hotels, Restaurants & Leisure | Reports January 23, Before Market Opens

Key Takeaways

  • The Estimize consensus is calling for earnings per share of $1.45 on $6.05 billion in revenue, 4 cents higher than Wall Street on the bottom line and $50 million in revenue
  • McDonald’s faces tougher comparisons as McPick 2 and All Day Breakfast sales dry up
  • This year the focus shifts to growing the McCafe brand, expanding internationally, and revamping some of its classic menu items

McDonald’s success in 2016 was largely the result of two key promotional campaigns that drove earnings and sales higher; the McPick 2 and all day breakfast. Both initiatives helped attract a wider audience and were more appealing to value-focused consumers. This year the focus shifts to growing the McCafe brand, expanding internationally, and revamping some of its classic menu items. Many of these initiatives, which are already underway, provide a much needed level of support to McDonald’s fourth quarter report scheduled to take place early Monday morning.

The consensus estimate at Estimize pegs earnings for the golden arches at $1.45 per share, about 13% higher than the same period last year. That estimate edged higher by 3% since the most recent report at the end of October. Revenue for the period is expected to drop by 5% to $6.05 billion, marking 8+ consecutive quarters of negative top line growth. Americans’ newfound adoration for healthier lifestyles clearly put a dent in McDonald’s sales growth in recent years.

Still, the stock continues to make gains. In the past 3 months share prices increased by 10% on increased business optimism, but during the earnings period the stock historically doesn’t move. If the numbers come in strong though, shareholders can expect to receive a healthy boost

.