McDonald's Stock Struggles After Rare Earnings Miss

McDonald's (MCD) stock is bouncing between positive and negative territory Tuesday after the fast-good giant disclosed first-quarter results that were mixed compared with analysts' expectations.

In the three months ended March 31, the fast food giant's revenue increased 4.6% year-over-year to $6.2 billion. Earnings per share (EPS) were 2.7% higher at $2.70, while its global comparable-store sales rose 1.9% from Q1 2023. 

However, McDonald's said that comparable (same-store) sales in its International Development Licensed Markets were down slightly due to the war in the Middle East, which more than offset positive comparable sales in Japan, Latin America and Europe.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

The results were mixed compared with what analysts were expecting. According to CNBC, Wall Street was calling for revenue of $6.2 billion, earnings of $2.72 per share and global comparable-store sales growth of 2.1%.

Per data from S&P Global Market Intelligence, the results marked the first bottom-line miss for McDonald's since Q4 2021.

"Our global comparable sales growth in the first quarter marks 13 consecutive quarters of positive comparable sales growth with 30% growth over the last 4 years," McDonald's CEO Chris Kempczinski said in a statement. "As consumers are more discriminating with every dollar that they spend, we will continue to earn their visits by delivering leading, reliable, everyday value and outstanding execution in our restaurants."

Where could McDonald's stock go from here?

Unlike fellow Dow Jones stock 3M (MMM), which is notably higher after its Q1 earnings report, analysts are overwhelmingly upbeat toward McDonald's. 

According to S&P Global Market Intelligence, the consensus analyst target price for MCD stock is $320.69, representing implied upside of more than 17% to current levels. Additionally, the consensus recommendation is Buy.

Financial services firm UBS is one of the more bullish outfits on McDonald's with a Buy rating and $335 price target on the stock, representing implied upside of over 22% to current levels.

"Despite MCD's recent commentary around international macro pressures and ongoing lower income consumer challenges in the U.S., we believe the brand is well positioned to drive an improved sales trajectory through the year and gain further share in key markets," UBS said in an April 5 report.

Related Content

• Kiplinger's Earnings Calendar for This Week
• Kiplinger's Economic Calendar for This Week
• Eli Lilly Stock Surges on Demand for Weight-Loss Drugs