4 key takeaways from McDonald’s Q1 earnings report
- McDonald's tops analysts' estimates for earnings and revenue in fiscal Q1.
- The fast food chain expects about 15% growth in annual systemwide sales.
- McDonald’s shares opened over 0.5% up in the stock market on Thursday.
McDonald’s Corp (NYSE: MCD) published its earnings report for the fiscal first quarter on Thursday that came in better than what analysts had anticipated, despite the COVID-19 disruptions in recent months.
1. Financial performance
McDonald’s said that its net income in the first quarter printed at £1.10 billion that translates to £1.47 per share. In the comparable quarter of last year, its net income was capped at a much lower £720 million or £1.05 per share. In the prior quarter (Q4), McDonald’s had recorded £1.01 billion of net income.
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On an adjusted basis, the fast-food company earned £1.38 per share in Q1. McDonald’s generated £3.68 billion of revenue in the recent quarter versus the year-ago figure of £3.38 billion. According to FactSet, experts had forecast the company to post £3.61 billion of revenue in the first quarter. Their estimate for adjusted per-share earnings stood at a lower £1.30.
2. Comparable sales
In the United States, McDonald’s said, its comparable sales in the first quarter jumped 13.6%. Global comparable sales, on the other hand, increased 7.5% versus a 4.9% growth expected. International developmental licenses markets, the NYSE-listed company added, saw a 6.4% increase in same-store sales – a significant improvement from a 5.3% decline last year.
3. Future guidance
On the back of robust quarterly performance, McDonald’s raised its guidance on Thursday for full-year systemwide sales. The company now forecasts close to 15% growth in systemwide sales this year versus just over 10% expected earlier. U.S. comparable sales in the second quarter, as per the Chicago-based company, will outplace levels seen in the same quarter of 2019.
4. CFO’s comments on CNBC’s “Squawk on the Street”
McDonald’s CFO Kevin Ozan joined CNBC’s “Squawk on the Street” on Tuesday. Commenting on the systemwide sales guidance, the finance chief said:
“In the U.S., we’ve seen a big dramatic increase in digital sales and in delivery sales. Same internationally on the delivery and drive-thru front. But internationally, we need the dining rooms to open because there, they are a bigger percentage of our sales. I think what’s driving our sales is a combination of a lot of things that have happened over the last year. So, it isn’t just digital, it isn’t just delivery. What’s driving our sales is also menu, really good operations, we’ve simplified our menu, reduced our service times and increased the effectiveness of our marketing.”
Impact on the share price
McDonald’s shares opened more than 0.5% up in the stock market on Thursday and are currently trading at a per-share price of £168.70. At the time of writing, it is valued at £125.77 billion and has a price to earnings ratio of 37.27.