McDonald's Meets on the Top Line, Misses Where it Counts

Seth Jayson, The Motley Fool
Updated

McDonald's (NYS: MCD) reported earnings on Oct. 19. Here are the numbers you need to know.

The 10-second takeaway
 For the quarter ended Sep. 30 (Q3), McDonald's met expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue was unchanged and GAAP earnings per share dropped slightly.


Margins dropped across the board.

Revenue details
 McDonald's booked revenue of $7.15 billion. The 23 analysts polled by S&P Capital IQ predicted net sales of $7.15 billion on the same basis. GAAP reported sales were 0.2% lower than the prior-year quarter's $7.17 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
 EPS came in at $1.43. The 25 earnings estimates compiled by S&P Capital IQ predicted $1.47 per share. GAAP EPS of $1.43 for Q3 were 1.4% lower than the prior-year quarter's $1.45 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
 For the quarter, gross margin was 39.9%, 70 basis points worse than the prior-year quarter. Operating margin was 31.2%, 130 basis points worse than the prior-year quarter. Net margin was 20.3%, 70 basis points worse than the prior-year quarter.

Looking ahead
 Next quarter's average estimate for revenue is $6.94 billion. On the bottom line, the average EPS estimate is $1.32.

Next year's average estimate for revenue is $27.54 billion. The average EPS estimate is $5.30.

Investor sentiment
 The stock has a five-star rating (out of five) at Motley Fool CAPS, with 5,836 members out of 6,121 rating the stock outperform, and 285 members rating it underperform. Among 1,487 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,435 give McDonald's a green thumbs-up, and 52 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on McDonald's is outperform, with an average price target of $98.70.

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The article McDonald's Meets on the Top Line, Misses Where it Counts originally appeared on Fool.com.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of McDonald's. Motley Fool newsletter services recommend McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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