McDonald’s (MCD) reported impressive second-quarter results. Earnings and revenues handily beat consensus estimates despite the restaurant chain facing restrictions on the number of hours it could operate. Dine-in capacity was also significantly scaled down due to COVID-19 restrictions.
Q2 earnings came in at $2.37 per share, better than the $2.08 a share that analysts expected. Revenues of $5.89 billion easily beat analysts’ projections of $5.53 billion. Global comparable sales were also up by 40.5%. (See McDonald’s stock charts on TipRanks)
The solid results reflect stronger operating performances across all the key segments on increased sales-driven restaurant margins. McDonald’s also benefited from fewer restaurant closures and the easing of COVID-19 restrictions.
Comparable sales in the U.S were up 14.9% on a 2-year basis, benefiting from larger order sizes on the back of higher menu prices. Delivery and digital platforms also contributed to the rise in sales.
According to McDonald’s CEO Chris Kempczinski, the solid results demonstrate the strength and resilience of the business.
Kempczinski stated, “Along the way, we’ve always focused on following our customers’ needs, finding the most convenient and engaging ways for them to enjoy McDonald’s. It’s clear that our next chapter will be driven by our leadership in digital.”
Yesterday, RBC Capital Analyst Christopher Carril reiterated a Buy rating on the stock and raised the price target to $268 from $263, implying 10.84% upside potential to current levels.
Consensus among analysts is a Strong Buy based on 22 Buys and 2 Holds. The average McDonald’s price target of $262.09 implies 8.40% upside potential to current levels.
MCD scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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