McDonald’s Q3 Earnings Preview: Positive results ahead, but E. Coli fallout to be key focus

McDonald’s (NYSE:MCD) is scheduled to announce its third-quarter earnings results on October 29, before the opening bell.

Wall Street, on average, expects the Chicago-based company to post a quarterly EPS of $3.20 (+0.3% Y/Y) along with a revenue of $6.82 billion (+1.9% Y/Y).

Keybanc believes “McD’s U.S. same-store-sales growth improved since July and likely finished the third quarter in positive territory, aided by a more effective high-low strategy.”

Wedbush expects upside growth in U.S. same-store-sales in the third quarter, but also remains focused on any E. coli fallout.

McDonald’s (MCD) has come under intense scrutiny in the last week, after the world’s largest fast-food chain was linked to an E. coli outbreak by the U.S. Centers for Disease Control and Prevention (CDC) that has sickened 75 people across 13 states and killed one person.

The illnesses were linked to its popular Quarter Pounder burger. However, McDonald’s is bringing back the burger, to all restaurants in the coming weeks, after public health agencies confirmed the recent E. coli outbreak was linked to slivered onions, not the beef patty.

Following the news, shares of the restaurant group were up 1.5% on Monday.

Analysts from Baird downgraded the stock to neutral from an outperform rating on concerns that the outbreak could pose a major threat to consumer sentiment and U.S. comparable sales.

In the previous quarter, MCD missed estimates for profit and revenue, while its global comparable sales also fell 1.0% in comparison to the +0.8% consensus expectation of analysts.

Over the last 2 years, MCD has beaten EPS estimates 75% of the time and has beaten revenue estimates 75% of the time.

Over the last 3 months, EPS estimates have seen 1 upward revision and 27 downward. Revenue estimates have seen 2 upward revisions and 22 downward.

A recent SA contributor analysis highlighted the company’s automation to drive foot traffic and reduce labor costs as a positive, despite wage pressures and health concerns .

In 2024, McDonald’s shares have risen about 0.1%. Seeking Alpha’s Quant has rated the company as a Hold, while Wall Street analysts have recommended the company as a Buy.