McDonald's (MCD) to report earnings tomorrow: here is what to expect

What happened

McDonald's reports earnings Wednesday before the market opens. Last quarter it met revenue expectations at $7.10 billion, up 3.7% year on year, with same-store sales in line with estimates. Analysts expect revenue to grow 3.1% this quarter, and they reconfirmed their estimates over the last 30 days.

Confirmed

Global impact / market context

Investors use earnings to check whether McDonald's sales growth is holding up. The company has missed revenue estimates several times over the last two years, so another miss could weigh on the stock. Peers Starbucks and Domino's both fell after their results, suggesting investors are sensitive to fast-food reports.

Analyst inference

Starbucks revenue fell 4.5% and missed estimates by 0.9%, while Domino's revenue rose 3.4% and beat by 0.9%. Yet Starbucks traded down 1.6% and Domino's down 4.8% after reporting, which means investors punished both misses and beats. That sets a cautious backdrop for McDonald's report.

Analyst inference

What to watch

1. Watch whether McDonald's revenue reaches the 3.1% year-on-year growth analysts expect, compared with the roughly 3% increase it recorded in the same quarter last year. Confirmed
2. Watch whether McDonald's misses revenue estimates again, since analysts have reconfirmed their estimates over the last 30 days and expect the business to stay the course. Proposed
3. Watch same-store sales, which track sales at restaurants open at least a year, for signs of demand after Starbucks' decline and Domino's beat drew negative stock reactions. Analyst inference

Evidence

• stockstory.org