McDonald’s stock, which is set to report its fiscal first-quarter results, is expected to trade higher with revenues and earnings exceeding expectations. The weakening of major currencies against the U.S. dollar in the previous year was a challenge for McDonald’s, but menu price increases helped offset this headwind. During the pandemic, the company increased its cash reserves substantially, investing in drive-thru and delivery services while still growing its cash reserves.
In 2024, McDonald’s plans to expand its net restaurant units, increase operating margins, and open over 2,100 new restaurants globally. The company is targeting expansion to 50,000 restaurants by 2027 and aims for a 90% free cash flow conversion rate by the end of 2024. MCD stock has shown gains but has underperformed the S&P 500 in certain years. Despite this, the Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 over recent years.
The company’s revenues are expected to be slightly ahead of consensus estimates for Q1 2024, with successful menu and marketing campaigns contributing to strong comparable sales. McDonald’s systemwide sales have been impacted by the Middle East war, particularly in the International Developmental Licensed Markets and Corporate segment. Despite this, EPS is likely to surpass consensus estimates. McDonald’s stock price estimate is higher than the current market price, with a valuation of $301 per share, indicating a potential 10% upside.
As uncertainties such as high oil prices and elevated interest rates persist, it remains to be seen whether McDonald’s will face challenges in outperforming the S&P 500 in the next 12 months. The company’s focus on expansion, digital growth, and menu innovation will play a crucial role in its future performance. Investors can track MCD stock and its peers through Trefis’ detailed analysis and comparisons to make informed investment decisions.Overall, McDonald’s is expected to deliver strong results in Q1 2024 and continue its growth trajectory in the coming years.
