TLDR
- McDonald’s (MCD) stock traded near $273, up about 4%, after Tuesday’s close of $263.04.
- Q3 adjusted earnings hit $3.57 a share, ahead of the $3.38 to $3.40 analysts expected.
- Revenue came in at $7.16 billion, under the $7.28 billion Wall Street forecast.
- U.S. comparable sales fell 0.2%, but the drop was smaller than expected.
- The NEXT strategy calls for about $8.5 billion in franchisee support through 2036.
McDonald’s (MCD) stock was trading near $273 on Wednesday morning, up about 4%. That came after a Tuesday close of $263.04, down 0.9%.
The move followed the third-quarter report, which had good news and bad news. Profit beat the forecast, while revenue fell short.
Adjusted earnings came in at $3.57 a share. Analysts had looked for $3.38 to $3.40.
A year ago, the same figure was $3.22. That marks a solid step up.
Revenue rose 1.1% from last year to $7.16 billion. Wall Street was expecting about $7.28 billion.
Stock was still down about 14% for the year as of Tuesday’s close. So the pop is welcome relief for holders.
Sales Hold Up Better Than Feared
Global same-store sales grew 1.5% in the quarter. Analysts had called for 1.3%.
A year ago, that number was 3.6%. So growth cooled, but it still beat the bar.
U.S. comparable sales slipped 0.2%. Analysts had braced for a bigger drop of about 0.47%.
Last year, U.S. sales rose 2.4%. Management blamed this quarter’s dip on fewer guest visits.
Higher check sizes offset most of that traffic loss. In other words, fewer people came, but they spent a bit more.
CEO Chris Kempczinski said the company was “encouraged by improvement” in the U.S. as the quarter went on. He pointed to its “intervention on value.”
That push includes a buy-one-add-one deal and loyalty programs. The goal is to win back lower-income customers who are feeling the pinch from high prices.
What the NEXT Plan Calls For
McDonald’s unveiled its NEXT strategy at an investor day on Sept. 23. It includes redesigned restaurants and the use of artificial intelligence.
The company plans to invest about $8.5 billion through 2036. The money goes toward capital help and rent relief for franchisees, starting with $5 billion through 2030.
Some Wall Street analysts worry the heavy spending could weigh on near-term earnings. Management is aiming for a 2.5-point lift in restaurant-level efficiency over the long run.
The stock has risen about 10% since the NEXT plan was announced. Earlier this year, McDonald’s also named Skye Anderson to lead its U.S. business, replacing Joe Erlinger.
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