McDonald’s Corp. (MCD) revenue just missed estimates, driven by its worst US sales drop since the pandemic. Revenues of $6.39 billion missed the average target of $6.44 billion, while earnings per share of $2.83 were in line. Our members think the stock is overvalued, writes Tom Bruni, head of market research at The Daily Rip by Stocktwits.
Overall, same-store-sales growth rose 0.4%. But the US figure fell 1.4% year-over-year, more than double Wall Street’s 0.6% estimate. Although traffic was slightly positive, customers spent less than usual, raising concerns that the value meals it relies on to drive traffic aren’t having the desired effect.
Management pushed back on that concern, saying that the average check size on a $5 meal deal is over $10, indicating customers are adding menu items that aren’t discounted to their orders. Instead, they blamed the impact of the E. coli outbreak on its Quarter Pounder burgers, which hurt customer perception. Overall traffic is still recovering from that hit.
Despite shares rising 5% and Stocktwits sentiment hitting “extremely bullish” territory, Stocktwits poll respondents remain mixed on the results. Roughly 61% of respondents see the stock as either “fairly valued” or “overvalued.”
