Wall Street hopes the worst is behind McDonald's ahead of its Q4 earnings report
McDonald's ( MCD ) investors were not lovin' 2024 as the fast food chain faced an underperforming stock, lackluster sales, and an E. coli outbreak .
Many on the Street hope its fourth quarter results, which are set to publish on Monday before market open, are the "low point in recent history for the brand," as Citi analyst Jon Tower wrote in a note to clients.
Per Bloomberg estimates, same-stores sales are expected to fall 0.91% year over year, led by international operated markets, down 1.22%.
Revenue is expected to grow slightly to $6.45 billion, while earnings per share are expected to come in at $2.84.
In 2025, the fast food giant aims to regain foot traffic with its McValue menu platform and new menu items in the form of chicken tenders, strips, and the return of snack wraps.
The quarter, which ended Dec. 31, will include the effect of its E. coli outbreak in late October.
Earnings preview breakdown
Here's what McDonald's is expected to report in the fourth quarter, per Bloomberg consensus data, compared to the year prior:
Here's what McDonald's is expected to report for the full fiscal 2024 year, per Bloomberg consensus data, compared to 2023:
January was another tough month for McDonald's despite optimism around the McValue platform, per BTIG analyst Peter Saleh.
"It sounds like January was not a good month across the board, mostly driven by really poor weather in every region, snow, extreme cold," Saleh told Yahoo Finance over the phone. The conditions make it difficult to assess whether the value menu drove incremental foot traffic.
TD Cowen's Andrew Charles said he'll be looking for company-operated stores' margins and any impact from the value offerings.
Franchise operators had hoped that the McValue platform would lure in customers, offsetting any hit to margins.
"There may be a margin challenge where we are providing food at a great value, but if we can bring more people in, then it will take care of that. That's our goal," McDonald's franchise operator David Costa, who operates 18 locations in Florida with his father, told Yahoo Finance prior to the launch in January.
Any forward-looking commentary will also be top of mind for Wall Street.
"We think it's a back-half-weighted year for 2025 for McDonald's," said Charles, who rates the stock at a Hold.
Wedbush analyst Nick Setyan, who has an Outperform rating on the stock, shared a similar anecdote.
"The comparisons get so easy in the second half that even if they fumble through the first half ...[McDonald's is] still going to have [a] positive, constant recovery story in the second half," Setyan told Yahoo Finance on the phone.
Saleh, who has a Neutral rating, said franchisees are worried about the overdependence on promotions.
In January, the buy one, get one offering makes up a mid-teens percentage of sales and the $5 Meal Deal accounts for low-double digits, plus franchisees are also offering in-app promotions, per his note to clients.
"When 35% of your business is now on steep discount or free, [it's] hard to really make a lot of money on that," Saleh said."[It's] going to be tough to wean the consumer off of that and bring them back to kind of more profitable type products."
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BrookeDiPalma