McDonald’s stock leads Dow Jones higher as international comparables show growth
- McDonald's stock rises 5% after unveiling Q4 results.
- Comparable sales worldwide grew 0.4%, above -0.93% expected.
- Adjusted EPS of $2.83 missed consensus by 3 cents.
- Revenue of $6.39 billion misses Wall Street average by $90 million.
McDonald’s stock (MCD) ploughed more than 5% higher at points on Monday morning despite missing fourth-quarter consensus on the top and bottom lines. The market, however, disregarded the major highlights to focus on growth in international comparables, which it views as evidence that management is righting the ship.
MCD stock chanced up 5% to above $309, its first return to this price level since plunging on October 22 of last year on E. coli concerns at some of its Midwestern locations.
The Dow Jones Industrial Average (DJIA), which includes McDonald’s, rode the wave 0.3% higher, while the NASDAQ easily clear 1.2% gains. The equity market is somewhat optimistic after the Trump administration opted for 25% tariffs on steel and aluminum, which are thought to be less abrasive than prior trade rhetoric. Basically, the market is hoping that Trump uses these tariffs to dismiss the prior 25% levies on Canada and Mexico that had rattled the markets in previous weeks.
McDonald’s earnings news
For the fourth quarter, McDonald’s produced adjusted earnings per share of $2.83, which was $0.03 behind the consensus and down 3% from a year earlier. GAAP EPS was $2.80. Revenue of $6.39 billion missed its mark by $90 million and slowed 0.3% YoY.
What’s not to like?
The market expected defeat though with the E. coli news affecting demand for its tasty burgers. All analysts covering the stock had already lowered their earnings expectations.
What made them turn that frown upside down was total comparable sales. This figure had been falling since the first quarter of 2023 when it came in at a robust 12.6%. In Q4 2024 it was 0.4%, but that was a step up from the -1.5% it reported in Q3. Analysts had expected total comparables to decrease 0.93%.
The turnaround in total comparable sales was led by the international segment, particularly its Licensed Markets division that reported 4.1% growth. US comparable sales decreased by 1.4% in the quarter.
Management said they expect to achieve operating margin in 2025 in the mid-to-high 40% range and to open 1,800 net new locations. About 600 new locations are slated for the US with the majority being opened abroad.
McDonald's stock forecast
McDonald's stock has now made up much of the ground lost on October 22, 2024, when MCD plunged 9.45% on the E. coli outbreak news. Sitting near $309, bulls could decide to close in on the all-time high of $317.67 from October 21, 2024.
Without much organic growth to report at present, however, expect MCD to consolidate in the low $300s. This stock has had a good day, but traders are likely to take profits.
Below this price action lies the 100-day Simple Moving Average (SMA) at $295. January's lows and the 200-day SMA sit in the bottom half of the $280s and provide further support.
MCD daily stock chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
