McDonald’s, the fast-food giant, is set to release its fourth-quarter earnings report on Monday, and Wall Street analysts are predicting slower growth for the company. According to analysts surveyed by LSEG, formerly known as Refinitiv, the expected earnings per share is $2.82, with revenue projected at $6.45 billion.
The year 2023 started off strong for McDonald’s, with double-digit growth in same-store sales and increased foot traffic during the first half of the year. However, the third quarter brought challenges as low-income consumers reduced their spending, resulting in a decline in traffic to McDonald’s U.S. restaurants. As we enter the fourth quarter, Wall Street expects this bumpy road to continue.
Analysts forecast that McDonald’s quarterly same-store sales will only grow by 4.7%, a significant drop from the 10.9% growth reported a year ago. The chain’s price hikes have slowed down, and the entire industry experienced a decrease in foot traffic in November and December.
CEO Chris Kempczinski has also expressed concerns about the impact of the Israel-Hamas war on McDonald’s sales, both in the Middle East and in some markets outside of it. The company’s Israeli franchisee faced backlash on social media after offering discounts to soldiers, leading to calls for a boycott of McDonald’s.
Starbucks, another major player in the fast-food industry, also faced boycotts related to the Middle East conflict. The coffee giant reported a decline in U.S. traffic as occasional customers stopped visiting its cafes.
Looking ahead to 2024, Wall Street expects McDonald’s to earn $12.53 per share, a 6.1% increase from the previous year, and generate $27.14 billion in revenue, reflecting a 6.3% increase.
Despite these challenges, McDonald’s stock has seen a 12% rise over the past year, giving the company a market value of approximately $215 billion.
As McDonald’s prepares to release its fourth-quarter earnings, investors and industry analysts will be closely watching the results to gauge the company’s performance in the face of ongoing challenges. The impact of the Israel-Hamas war and the decline in foot traffic across the industry will be key factors to consider. Additionally, McDonald’s ability to navigate these obstacles and maintain its market value will be crucial for its future success.
