To The Moon

$McDonald's(MCD)$ is expected to report their quarterly earnings on 29 July 2024 before market open. McDonald has recently announced a quarterly cash dividend of $1.67 per share.

Market is expecting MCD to post quarterly earnings of $3.07 per share, this is a decline of 2.8% compared to the same period last year. Revenues are forecasted to be $6.65 billion, representing a year-over-year increase of 2.4%.

U.S. Fast Food Chains Value Meal Launch Performance In Focus In Their Earnings

As we will be expecting U.S. fast food chains like Burger King and other chains with McDonald reporting their quarterly results over the next few weeks.

The performance of the fast food chains’ value meal launches would be watched closely, I will be more interested in McDonald value meal launches.

The fast food chains have been trying hard to improve traffic as the menu prices increase has kept diners especially the lower income group. So the focus on how consumers would be responding to the value and discount and also the duration of how long would these discounts would be going on to bring back the consumer.

For McDonald, they have been extending the $5 value meal over the past few months, well into August, after the initial launch on 25 June, rival Burger King had offered $5 “Your Way Meal” and Wendy has a similar one with their $3 breakfast meal.

Since these promotions are after the second quarter and the period is still short, so if we were to look at the benefits, it would be only temporary. These traffic growth might not be significant in the upcoming quarterly reporting.

Institutions Ownership Significant To McDonald Stock Price Confidence

The ownership structure of McDonald's (MCD) stock is a mix of institutional, retail and individual investors. Approximately 40.98% of the company’s stock is owned by Institutional Investors, 0.20% is owned by Insiders and 58.82% is owned by Public Companies and Individual Investors

Institutions' substantial holdings in McDonald's implies that they have significant influence over the company's share price. 43% of the business is held by the top 25 shareholders.

There is no significant dilution of shares for McDonald from these institutional investors. This might show the confidence they have on McDonald despite a negative return on its stock price.

Analyst Price Target Forecast

Based on 27 Wall Street analysts offering 12 month price targets for McDonald's in the last 3 months. The average price target is $302.96 with a high forecast of $357.00 and a low forecast of $265.00. The average price target represents a 20.48% change from the last price of $251.46.

If McDonald need to really see a higher movement in its stock price, they need to show that their restaurants growth in the other regions are also increasing their profit.

McDonald (MCD) YTD Returns On Stock Price A Concern

McDonald has lost more than 10% year-to-date, this could be on top of consumer tightening their spending on fast food, amidst promotion to eat healthy.

We need to see McDonald effort in promoting more healthy diet meal to appeal to the middle class, this might be the consumer who are willing to spend to get a fast meal due to their busy schedule.

Technical (MACD and KDJ)

McDonald have been on the downward trend as consumer discretionary sector has suffered negative gain over the last week.

There has been signals from MACD and KDJ showing that McDonald is heading downside, we would need McDonald to produce a positive earnings and also the guidance for 2024 on how they could expect the value meal promotion could bring their sales volume up.

Summary

If we looked at the consumer discretionary sector as of yesterday, it has lost -0.42%, this trend could continue as investors continue to rotate into sectors like energy, industrials, financials and materials.

I would be monitoring closely to see if there is any change to the movement for the consumer discretionary sector.

McDonald need to show that their value meal promotion could help to push up their sales volume.

Appreciate if you could share your thoughts in the comment section whether you think McDonald could show that their value meal promotion could help to increase their revenue.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.