Earnings Update: McDonald's Corporation (NYSE:MCD) Just Reported Its Full-Year Results And Analysts Are Updating Their Forecasts

McDonald's Corporation (NYSE:MCD) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It was a credible result overall, with revenues of US$25b and statutory earnings per share of US$11.56 both in line with analyst estimates, showing that McDonald's is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for McDonald's

Taking into account the latest results, the current consensus from McDonald's' 31 analysts is for revenues of US$26.9b in 2024. This would reflect a credible 5.6% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 6.2% to US$12.40. In the lead-up to this report, the analysts had been modelling revenues of US$27.1b and earnings per share (EPS) of US$12.52 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$324. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values McDonald's at US$357 per share, while the most bearish prices it at US$280. This is a very narrow spread of estimates, implying either that McDonald's is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the McDonald's' past performance and to peers in the same industry. It's clear from the latest estimates that McDonald's' rate of growth is expected to accelerate meaningfully, with the forecast 5.6% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.3% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.8% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, McDonald's is expected to grow slower than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$324, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for McDonald's going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for McDonald's that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.