McDonald’s Posts Q4 Miss Due to Rising Costs

McDonald’s Corporation (NYSE: MCD) reported weaker-than-expected Q4 results, missing both earnings and revenue estimates due to higher costs despite positive comparable sales across all segments.

Shares of the American fast food company were down 0.5% on January 27 to close at $248.74.

Q4 Numbers

Adjusted earnings of $2.23 per share grew 33% year-over-year but lagged analysts’ expectations of $2.34 per share. The company reported earnings of $1.70 per share for the prior-year period.

Further, revenues jumped 13% year-over-year to $6.01 billion but fell modestly short of consensus estimates of $6.03 billion. The increase in revenue reflects a surge in global comparable sales revenues driven by positive comparable sales across all segments.

However, total operating costs and expenses increased 14% year-over-year to $3.6 billion.

Notably, for the full year 2021, McDonald’s Systemwide sales grew 21% and surpassed $112 billion globally. Similarly, Digital Systemwide sales exceeded $18 billion, representing over 25% of the total Systemwide sales in the top six markets.

CEO Comments

McDonald’s President and Chief Executive Officer, Chris Kempczinski, commented, “While 2021 was a year of continued challenges around the world, the McDonald’s System came together with unparalleled dedication and delivered truly exceptional performance.”

Looking ahead into FY2022, he added, “We enter this new year with a clear focus on creating seamless and memorable customer experiences and harnessing our momentum to drive long-term, sustainable growth for all of our stakeholders.”

Wall Street’s Take

Following the Q4 results, RBC Capital analyst Christopher Carril reiterated a Buy rating on the stock with a price target of $300 (20.61% upside potential).

Consensus among analysts is a Strong Buy based on 17 Buys and 3 Holds. The average McDonald’s stock forecast of $291.26 implies 17.09% upside potential to current levels.

TipRanks’ Smart Score

MCD scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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