McDonald’s Proves Bigger Is Better
MarketBeat.com | Oct 28, 2021 07:38AM ET
Given the state of today’s labor market, it is truly surprising to see McDonald’s (NYSE:MCD) not only meet the consensus estimates for revenue, but blow right through them. The company is a testament to the idea that bigger is better as it has been able to overcome widespread store closings, cut back hours, and the reduction or elimination of in-store dining. With the company already growing above the pre-pandemic levels and growth still in the forecast it is our view that McDonald’s and its 2.3% yield are a strong digital sales and the company’s recently launched loyalty program. Comps in the International segment are up nearly 9.0% on a two-year basis.
Moving down the report to the income portion of the statement, there is some margin contraction but less than 100 basis points at the operating level. That is less than expected and aided by revenue strength which carried through to the bottom line. On the bottom line, the company’s operating income is up 18% YOY but includes a positive benefit from the sale of stock in the Japanese unit. Adjusting for that, the $2.76 in EPS is up 24% from last year and beat the consensus by $0.29.
Looking forward, the company is expecting revenue strength to continue indefinitely and guided the market higher. McDonald’s is now expecting revenue growth in the range of high-teens versus the previously stated mid to high-teens and the consensus estimate for growth in the high teens.
h2 McDonald’s Resumes Repurchase Activity/h2McDonald’s has long been a consensus estimate of $261 and the high price target of $306 set by Loop Capital earlier this month.
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