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Robust Digital Sales to Drive McDonald's (MCD) Q1 Earnings

Zacks.com logo Zacks.com 4/26/2021

McDonald's Corporation MCD is scheduled to report first-quarter 2021 results on Apr 29, before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 2.9%.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.81 per share. Notably, the company reported an earnings of $1.47 in the year-ago quarter. The consensus mark for revenues stands at $5.01 billion, suggesting an improvement of 7.1% from the prior-year quarter.

Factors to Note

McDonald's first-quarter results are likely to reflect strong performance of drive-thru, delivery & take-away. Prior to the coronavirus crisis, drive-thru accounted for about two-thirds of all sales in the United States. Drive-thru now accounts for approximately 90% of sales. Moreover, the company is likely to have benefited from expansion efforts. Despite the pandemic, it opened about 500 restaurants across the market in 2020. McDonald's is planning to open more than 1,300 restaurants globally in 2021. The company anticipates systemwide sales growth, in constant currencies, in the low double digits in 2021.

Notably, the Zacks Consensus Estimate for revenues at international operated restaurants stands at $2,401 million, indicating an improvement of 0.9% from the prior-year quarter. Moreover, the company may have benefited from increase in revenues at franchise-operated restaurants. Notably, the Zacks Consensus Estimate for revenues at franchise-operated restaurants stands at $2,780 million, suggesting growth of 6.6% from the prior-year quarter.

However, dismal traffic and dine-in in services several markets might have weighed on the to-be-reported quarter’s performance.

McDonalds Corporation Price and EPS Surprise chart, line chart: McDonalds Corporation Price and EPS Surprise © Provided by Zacks.com McDonalds Corporation Price and EPS Surprise

McDonalds Corporation price-eps-surprise | McDonalds Corporation Quote

What the Zacks Model Unveils

Our proven model doesn’t predict an earnings beat for McDonald's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

McDonald's has an Earnings ESP of -1.14% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Retail-Wholesale space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Starbucks Corporation SBUX currently has a Zacks Rank #3 and an Earnings ESP of +7.42%.

Brinker International, Inc. EAT has a Zacks Rank #3 and an Earnings ESP of +8.37%.

Domino's Pizza, Inc. DPZ has a Zacks Rank #3 and an Earnings ESP of +2.75%.

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