analysis.hotforex.comMcDonald’s Q1 Earnings Report Preview

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McDonald's Q1 Earnings Report Preview

McDonald’s is scheduled to release its first-quarter 2022 financial report on April 28, 2022. This guide will explain what the company’s first-quarter earnings report could look like based on the company’s last earnings report.

McDonald’s published its fourth-quarter financial results for 2021 on January 27. The fast-food behemoth earned $1.64 billion, or $2.18 per share, in the fourth quarter, up from $1.38 billion, or $1.84 per share, in the prior year. The third-quarter rise in operating expenditures and expenses was 14% [1].

General and administrative expenses grew by 9%, mostly as a result of higher incentive pay as McDonald’s exceeded its performance targets.

Comparable sales grew in the United States as a result of considerable average spend per customer growth caused by anticipated menu price increases. Strong menu and marketing efforts, such as the McRib and Crispy Chicken Sandwich, as well as growth in digital channels supported by the loyalty programme, all contributed to a comparable sales increase. Over a two-year period, comparable sales increased 13.4% [1].

As a result of COVID-19-related initiatives, restaurants in France, the UK, Italy, and Germany saw considerable increases in sales. Throughout the quarter, COVID-related government restrictions kept comparable sales in Australia flat. Comparable sales climbed 8.2% over two years.

"While the year 2021 was marked by persistent global difficulties, the McDonald’s system demonstrated unmatched commitment and produced a genuinely extraordinary performance," stated Chris Kempczinski, President and Chief Executive Officer of McDonald’s. "We approach this new year with a laser-like concentration on delivering frictionless and memorable client experiences and capitalising on our momentum to fuel long-term, sustainable development for all of our stakeholders [1]."

The firm expects to spend between $2.2 billion and $2.4 billion on capital expenditures in the next few years. Approximately half of that money will be used to establish roughly 1,400 new restaurants, which are expected to contribute 1.5% to the company’s total sales in 2022. Additionally, around 40% of capital expenditures will be directed at US chains, mostly for restaurant modernization.

Analyst expectations for first-quarter 2022 sales vary between 5.3 billion and 5.9 billion dollars, with an average estimate of 5.6 billion dollars. Earnings per share for the first quarter of 2022 vary from 1.89 to 2.33, with an average expectation of 2.17.

Source: money.cnn

According to the business, food and paper costs are likely to increase by the high single digits or low double digits in the United States in 2022. In comparison, similar prices for 2021 increased by just 4%. There is a good chance that prices for food and paper will go up in other countries, but not as much as in the United States [2].

McDonald's Stock Analysis

Since dropping below 217 in March 2022, the price of McDonald’s has significantly recovered. At the time of writing, the price is trading at 248.68.

McDonald’s has been losing money since the beginning of the year. By March, the price had fallen by more than 19%. The price recovered until April 21, at which point it fell again.

On the daily chart, the price is marginally below the 100-day moving average, and the MACD is skewed to the downside.

McDonald’s’ next point of resistance is about 255. If it breaks through this level, the stock may go toward the 260 level.

On the other hand, the stock’s support level is located at about 245.00. If the price breaks through this level, it may continue to fall toward 242.0 [3].

1. https://corporate.mcdonalds.com/content/dam/gwscorp/assets/investors/financial-information/earnings-release/Q4%20Earnings%20Release%20-%2099.1.pdf


2. https://finance.yahoo.com/news/mc-donalds-q-4-earnings-122112879.html


3. https://finance.yahoo.com/quote/MCD/chart?p=MCD

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Adnan Rehman

Market Analyst

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Source: McDonald's Q1 Earnings Report Preview