McDonald's Q4 Performance Diverges Between US and Overseas, Growth Prospects Remain Dim

TradingKeyFeb 11, 2025 9:27 AM

TradingKey – Global fast-food giant McDonald's (MCD.US) reported mixed results for Q4 2024, with unexpected growth in international sales offsetting declines in the U.S. market. Despite this, the company’s CEO acknowledged ongoing challenges in market conditions.

Q4 2024 Earnings Highlights

On Monday, February 10, McDonald's released its Q4 2024 earnings report:

- Adjusted earnings per share (EPS): $2.83, in line with expectations ($2.85), reflecting stable profit margins.

- Revenue: $6.39 billion, slightly below both the expected $6.45 billion and last year’s $6.41 billion.

- Global comparable sales: Increased by 0.4%, surpassing expectations and breaking a two-quarter decline.

- U.S. sales: Fell by 1.4%, a steeper drop than anticipated.

- International growth: Strong performance in regions like the Middle East and Japan helped drive overall sales.

McDonald's stock responded positively to the report, rising 4.8% on Monday. Year-to-date, MCD shares have gained 6.39%, outperforming the S&P 500’s 3.14% increase.

Mixed Signals for McDonald's Future Growth

TradingKey analyst Nick Li noted that the stock's rise was mainly driven by McDonald's resilience in international markets and strong customer loyalty. However, the Q4 financial performance remains a mixed bag.

Li highlighted that Two factors worked together to help McDonald's achieve a restorative growth in same-store sales, which rose 0.4%, beating Wall Street expectations of a 1% decline. In international markets, effective localization, menu innovation, and high consumer demand drove strong performance. Also, the $5 Meal Deal and McValue Menu attracted price-sensitive customers, boosting traffic and offsetting drops in average check sizes.

Yet, McDonald's stock price faces many hurdles. Balancing affordable prices with profitability is tough, especially as consumers spend less per meal. Despite the relatively optimistic financial forecasts, such as the projected revenue of $26-28 billion in 2025 and the expected adjusted EPS of around $3.0 in the next quarter, the actual realization of these figures is fraught with uncertainties. The overall growth prospect seems somewhat dim, leading investors to take a cautious stance.

CEO & CFO Commentary: Cautious Optimism

McDonald's CEO Chris Kempczinski acknowledged that the overall market remains sluggish. Meanwhile, the company’s CFO projected that Q1 2025 could be a low point for same-store sales, citing disruptions caused by winter storms and California wildfires.

However, if the U.S. market rebounds more strongly than expected, McDonald's could outperform its competitors in the months ahead.

Reviewed byTony

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