McDonald's ( NYSE: MCD ) is due to disclose earnings on January 31 in a report that could create ripples across the U.S. restaurant sector.
The restaurant giant is forecast to post revenue of $5.75B for the quarter and EPS of $2.46. The key metric wil be the U.S. same-store sales mark with expectations running as high as +9% for the quarter. McDonald's ( MCD ) has beat revenue estimates in five of its last seven reports and topped EPS expectations in six of the last seven reports.
On Wall Street, UBS heads into the McDonald's ( MCD ) earnings report confident that profit guidance will be strong. The firm said MCD shares remain well positioned given the defensive attributes in an increasingly difficult macro. The chain's strong global sales momentum is expected to continue driven by key competitive advantages. Citi expects a generally positive update from MCD due to strong trends in the U.S. and easing foreign exchange headwinds.
Wells Fargo was more cautious with the restaurant stock rated at Equal Weight. Analyst Zachary Fadem and team think valuation discipline and risks around European exposure warrant a trip to the sidelines on the stock. Meanwhile, Bank of America expects fairly modest consensus estimate revisions ahead and noted relative value is at an historical peak, leaving less room for multiple expansion.
Overall, McDonald's ( MCD ) has 27 Buy-equivalent ratings from analysts vs. 10 Hold-equivalent ratings and 1 Sell-equivalent rating.
Key topics for the conference call will be the view on menu pricing, updates on menu innovation, the impact of the loyalty program. The very latest developments with traffic trends in Europe and U.S. staffing levels could also be key.
On Seeking Alpha, author Geoff Considine has a bull argument on MCD, author Value Prof makes the case for a Hold rating, and author DT Analysis is bearish on the fast-food stock. Read all the latest articles on McDonald's.
Sector watch: Wingstop ( WING ), Denny's ( DENN ), Domino's Pizza ( DPZ ) are the restaurant stocks with the strongest trading correlation with McDonald's in general. See the restaurant stocks with the highest Seeking Alpha Quant Ratings.
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McDonald's earnings preview: Investors look for U.S. sales strength and Europe resiliency