LIVE: McDonald’s Announces Earnings (MCD)

By admin on January 23, 2013

mcdonalds

Minutes away from the release of the McDonald’s fourth quarter earnings report, due out at 7:58 AM ET.

Analysts expect the fast-food giant to report earnings of $ 1.33 per share, down from $ 1.43 per share in the previous quarter.

Fourth-quarter sales are expected to come in at $ 6.898 billion, down from $ 7.152 billion in Q3.

In an earnings preview, Morgan Stanley analysts John Glass and Sushama Dasari write:

We’re not wild-eyed optimists, but do think we’re edging closer to an inflection point. Much like the last two Qs, the 4Q will have its challenges, including possible neg comps and commensurate margin pressure. However, with this Q and likely Jan comp outlook, we are now closer to the last known bad data points (Feb & Mar facing ~7.5% compares globally); then comparisons progressively ease, setting the stage for potential accelerated sales momentum. MCD still faces material challenges and must prove its new value efforts here and in Europe work, but the risk reward is becoming more positive.

Glass and Dasari have an “Equal-Weight” rating on the stock.

Deutsche Bank analysts Jason West and Justin Marshall raised their price target on McDonald’s shares last week ahead of earnings to $ 101.00 from $ 91.76.

The analysts, who have a “Buy” rating on the stock, wrote:

We believe MCD’s absolute and relative performance will improve in 2013. Big Mac faced a “perfect storm” of headwinds in 2012, many of which are unlikely to repeat. These included a significant (and planned) step-up in G&A spend, an ~18c f/x headwind, limited new product intros in the US, and a broad-based retrenchment in consumer spending (globally) against difficult SSS compares. While it’s never easy sledding in fast food, we believe MCD’s EPS growth is posted to accelerate starting in 2Q as SSS, G&A, and f/x compares improve simultaneously. Buy.

Oppenheimer analysts Brian Bittner and Michael Tamas are not quite as optimistic. In an earnings preview, they write:

4Q12 results and the “tough” data points we envision through 1Q13 are unlikely to coat MCD with the secret sauce needed for material stock appreciation. The consensus “buy” argument is based on easing comparisons that begin in 2Q13. We agree with the logic, but ’13 estimates still lack identifiable catalysts for upside, in our view. Even as sales laps will ease, concerning headwinds such as margin pressures, limited sales slack and lack of major share drivers remain a constraint to earnings growth. We will re-evaluate our thesis if probability and conviction for earnings upside improve in 2H13, but for now we remain confident in our “Perform” rating.

We will have the full release at 7:58 AM ET. Click here to refresh for LIVE updates >

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