McDonald's (NYSE:MCD) Stock Price Up 6.5% on Better-Than-Expected Earnings

Key Points

• McDonald’s shares rose 6.5% after quarterly EPS of $3.57 topped the $3.38 consensus, though revenue of $7.16 billion missed estimates of $7.28 billion.
• U.S. comparable sales fell 0.2%, their first decline in six quarters, highlighting pressure on domestic customer traffic; international markets and stronger franchised margins helped support results.
• The company raised its quarterly dividend to $1.93 per share, up from $1.86, equivalent to an annualized dividend of $7.72 and a 2.8% yield.

McDonald's Corporation (NYSE:MCD - Get Free Report) shares were up 6.5% during mid-day trading on Wednesday following a better than expected earnings announcement. The company traded as high as $281.14 and last traded at $280.2030. Approximately 11,492,042 shares were traded during mid-day trading, an increase of 165% from the average session volume of 4,337,033 shares. The stock had previously closed at $263.04.

The fast-food giant reported $3.57 earnings per share for the quarter, beating analysts' consensus estimates of $3.38 by $0.19. The business had revenue of $7.16 billion during the quarter, compared to analyst estimates of $7.28 billion. McDonald's had a net margin of 31.72% and a negative return on equity of 572.06%. McDonald's's revenue was up 1.1% compared to the same quarter last year. During the same period in the previous year, the business earned $3.22 EPS.

McDonald's Increases Dividend

The company also recently declared a quarterly dividend, which will be paid on Tuesday, December 15th. Shareholders of record on Tuesday, December 1st will be paid a dividend of $1.93 per share. This represents a $7.72 annualized dividend and a yield of 2.8%. This is an increase from McDonald's's previous quarterly dividend of $1.86. The ex-dividend date of this dividend is Tuesday, December 1st. McDonald's's dividend payout ratio is presently 60.44%.

Key Stories Impacting McDonald's

Here are the key news stories impacting McDonald's this week:

• Positive Sentiment: McDonald’s reported adjusted earnings of $3.57 per share, above estimates of about $3.38, with higher franchised margins helping offset soft U.S. sales. International markets provided an important source of growth. The profit beat appears to have outweighed the revenue shortfall in investors’ initial reaction. Article: McDonald's Q3 Earnings Beat on Franchised Margins, Revenues Miss
• Neutral Sentiment: The company plans to add value-focused meal bundles early next year to attract cost-conscious customers. Their success could help rebuild traffic, though the plans also underscore the challenge of winning back diners without putting pressure on pricing or margins. Article: McDonald's to add new value bundles next year
• Negative Sentiment: Revenue was $7.16 billion, below the $7.28 billion analyst estimate, while U.S. comparable sales fell 0.2%—their first decline in six quarters. The results point to continued pressure on domestic traffic as consumers contend with the cost of living. Article: McDonald's US sales decline for first time in six quarters despite value push
• Negative Sentiment: CEO Chris Kempczinski warned that anticipated inflation in 2027 calls for extreme caution on pricing. That could limit McDonald’s ability to pass higher costs on to customers, while further price increases risk worsening affordability concerns. Article: McDonald's CEO Sounds Alarm on 2027 Inflation, Says Pricing Requires Extreme Caution

Analyst Ratings Changes

A number of equities research analysts have recently issued reports on the stock. TD Cowen upped their price objective on shares of McDonald's from $270.00 to $285.00 and gave the company a "hold" rating in a research note on Wednesday. KeyCorp decreased their target price on shares of McDonald's from $305.00 to $280.00 and set an "overweight" rating on the stock in a research report on Tuesday, October 6th. Loop Capital lowered their price target on shares of McDonald's from $301.00 to $273.00 and set a "hold" rating for the company in a research note on Wednesday, August 5th. Tigress Financial upped their price target on shares of McDonald's from $385.00 to $390.00 and gave the company a "buy" rating in a research report on Friday, July 17th. Finally, Seaport Research Partners started coverage on shares of McDonald's in a research report on Wednesday, September 16th. They set a "neutral" rating for the company. One equities research analyst has rated the stock with a Strong Buy rating, twenty-two have given a Buy rating, thirteen have assigned a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat.com, McDonald's presently has a consensus rating of "Moderate Buy" and a consensus target price of $293.21.

Institutional Investors Weigh In On McDonald's

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the company. GKV Capital Management Co. Inc. bought a new position in McDonald's during the 1st quarter valued at about $33,000. Burkett Financial Services LLC boosted its holdings in shares of McDonald's by 2,312.5% during the 3rd quarter. Burkett Financial Services LLC now owns 193 shares of the fast-food giant's stock valued at $45,000 after acquiring an additional 185 shares during the last quarter. POM Investment Strategies LLC grew its stake in shares of McDonald's by 46.2% in the second quarter. POM Investment Strategies LLC now owns 174 shares of the fast-food giant's stock worth $47,000 after acquiring an additional 55 shares during the period. Westfuller Advisors LLC grew its stake in shares of McDonald's by 140.0% in the second quarter. Westfuller Advisors LLC now owns 180 shares of the fast-food giant's stock worth $49,000 after acquiring an additional 105 shares during the period. Finally, Mountain Hill Investment Partners Corp. grew its stake in shares of McDonald's by 777.8% in the third quarter. Mountain Hill Investment Partners Corp. now owns 237 shares of the fast-food giant's stock worth $55,000 after acquiring an additional 210 shares during the period. 70.29% of the stock is owned by hedge funds and other institutional investors.

McDonald's Stock Up 6.5%

The firm's fifty day moving average price is $247.96 and its two-hundred day moving average price is $282.99. The stock has a market capitalization of $198.28 billion, a PE ratio of 22.76, a PEG ratio of 3.03 and a beta of 0.42.

About McDonald's

McDonald’s Corporation is a global quick-service restaurant company that operates and franchises restaurants under the McDonald’s brand. Its restaurants serve a menu that includes hamburgers, cheeseburgers, chicken sandwiches, French fries, breakfast items, desserts, salads, beverages and coffee. Offerings vary by market, and many locations provide drive-thru service, delivery and digital ordering through the McDonald’s mobile app.

The company operates through a heavily franchised business model, with restaurants owned and operated by independent franchisees, affiliates and the company itself.

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