McDonald’s stock (NYSE: MCD), a restaurant chain consisting of more than 40,000 mostly franchised stores, is scheduled to report its fiscal first-quarter results on Tuesday, April 25. We expect MCD stock to likely trade lower with revenues and earnings missing expectations marginally in Q1 results. The weakening of all major currencies against the U.S. dollar has also been a major headwind for McDonald’s in FY 2022, and we expect it to impact first-quarter earnings as well. Rising costs continue to bite into restaurant operating margins, necessitating price increases to offset inflation. Its operating profit margin dropped from the near 45% rate the company set in 2021 to the current 40% in fiscal 2022 – thanks to rising costs. That said, MCD also warned that commodity, utility, and labor inflation could likely continue to be a drag on margins in 2023 as well.
Our forecast indicates that McDonald’s valuation is $266 per share, which is almost 9% lower than the current market price. Look at our interactive dashboard analysis on McDonald’s Earnings Preview: What To Expect in Fiscal Q1? for more details.
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