Earnings Preview: McDonald's

McDonald's Corp. (MCD) is expected to report Q3 earnings before the market open on Thursday, October 22 with a conference call scheduled for 11:30 am ET.

Guidance

Analysts are looking for a profit of $1.11 on revenue of $6.1B. The consensus range is $1.08-$1.13 for EPS, and revenue of $5.97B-$6.46B, according to First Call. Last month, the company reported a 10% dividend increase and said global same-store sales for August rose 2.2%, while U.S. business momentum continued with SSS up 1.7%. Global SSS climbed 4.3% in July.

Analyst Views

RBC Capital's channel checks indicate McDonald's U.S. same store sales were up 1.3% in September, which, if accurate, would be a slowdown from the 1.7% gain in August. At the same time, Bernstein believes McDonald's sales will be stronger than expected and that margins will be boosted by favorable commodity and currency factors. Overseas operations are expected to be helped by a weak U.S. dollar, according to a Jefferies analyst. Analysts and investors will listen for commnents on October sales.

Comments

[John Gordon]

My own guess as to McDonald's US same store sales is 0 to plus one.

The marketing has been intense and focused, and the instore POP very well done, but its a difficult time.

This is based on unit visits and periodic discussion with Store Managers and Region staff that I encounter, principally in California. My home market of San Diego is a mature, well penetrated MCD market and home to the West Coast MCD USA Region Office.

I just haven't seen anykind of traffic surge due to McCafe and Angus Burgers. The burger segment is SO crowded right now, although MCD did have the airwaves to themselves before CKR (Carl's/Hardee's) Big Burgers and Wendy;s et al. In addition, QSR comps across the board have been slipping since early 2009.

We'll see tomorrow.

John A. Gordon
Chain Restaurant Earnings and Economics Experts
pacificmanagermentcons...

2009 Oct 21 12:41 PM