McDonald’s (NYSE:MCD) is scheduled to report its Q4 2021 results on Thursday, January 27. We expect MCD to beat the consensus estimates for revenues but miss for earnings. The company has reported better than expected revenue and earnings figures in each of the last three quarters. MCD’s revenue recovery continued in the first nine months of 2021 led by the International Operated Markets segment which saw revenue grow by 31% y-o-y. We expect the segment to drive the FY2021 results, as well.
Our forecast indicates that McDonald’s valuation is $274 per share, which is 7.6% above the current market price of $255. Look at our interactive dashboard analysis on McDonald’s pre-earnings: What To Expect in Q4? for more details.
(1) Revenues expected to be ahead of consensus estimates
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McDonald’s revenues for full-year 2020 were $19.2 billion – down 9% y-o-y due to the pandemic. The company has seen recovery in FY 2021. For the first nine months revenue was recorded at $17.2 billion, up 31% y-o-y. Trefis estimates MCD’s Q4 2021 revenues to be around $6.6 billion, above the $6 billion consensus estimate. We expect International Operated Markets segment to continue driving the growth in the Q4. Overall for FY 2021 we expect revenue of $23.8 billion. Our dashboard on McDonald’s revenues offers more details on the company’s operating segments along with our forecast for the next two years.
(2) EPS likely to miss consensus estimates
MCD’s Q4 2021 earnings per share (EPS) is expected to be $1.81 per Trefis analysis, below the consensus estimate of $2.00. Overall for FY 2021 we expect to see EPS of $9.72 as net income margin recovers to 29.8%.
(3) Stock price estimate 7.6% above the current market price
Going by our McDonald’s valuation , with an FY 2022 EPS estimate of $11.27 and a P/E multiple of 24.3x, translates into a price of $274, which is 7.6% above the current market price of $255.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
While McDonald’s stock is likely to move higher in the near term, there are several peers in its sector that look like a Better Bet Than MCD Stock. Also, McDonald’s Peers summarizes how the company fares against peers on metrics that matter.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.
|S&P 500 Return||-8%||-8%||96%|
|Trefis MS Portfolio Return||-11%||-11%||249%|
 Month-to-date and year-to-date as of 1/21/2022
 Cumulative total returns since the end of 2016