McDonald's (MCD.US) reported weaker-than-expected results for Q4. Both revenue growth and adjusted earnings per share came in below forecasts. Nevertheless, the stock is seeing gains in pre-market trading.
McDonald's revenue for Q4 amounted to $6.39 billion, representing a year-over-year decline of approximately 0.3% and falling $50 million short of consensus estimates. Operating profit showed a slight year-over-year improvement, reaching $2.87 billion.
The company has adopted an aggressive promotional strategy aimed at attracting more customers. In the U.S. market, this approach appears to be having a positive impact, as McDonald's reported an increase in customer traffic at existing restaurants. However, total comparable sales in the country declined by 1.4% (versus an expected decline of 0.4%). Thanks to stronger-than-expected comparable sales growth at franchised international locations (up 4.1% YoY), overall comparable sales increased by 0.4% in Q4.
Investors are currently showing some confidence in the company despite the overall negative tone of the results. While McDonald's is struggling with revenue growth dynamics, the market's initial reaction suggests optimism that attracting new customers through promotions could become a stronger trend, ultimately helping the company return to improving its financial performance.
McDonald's pre-market trading. Source: xStation
Q4 2024 RESULTS:
- Revenue: $6.39 billion, -0.3% YoY (Estimate: $6.45 billion)
- Operating Profit: $2.87 billion, +2.4% YoY
- Comparable Sales Growth: +0.4% (Q4 2023: +3.4%, Estimate: -0.93%)
- U.S. Comparable Sales: -1.4% (Q4 2023: +4.3%, Estimate: -0.41%)
- International Operated Markets Comparable Sales: +0.1% (Q4 2023: +4.4%, Estimate: -1.14%)
- International Licensed Markets Comparable Sales: +4.1% (Q4 2023: +0.7%, Estimate: -0.38%)
- Earnings Per Share (EPS, GAAP): $2.80 ($2.80 in Q4 2023)
- Adjusted EPS: $2.83 ($2.95 in Q4 2023, Estimate: $2.84)
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