McDonald’s Corporation (NYSE:MCD) last week reported its latest third-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues of US$6.9b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$3.13, missing estimates by 2.1%. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for McDonald’s
Following the latest results, McDonald’s’ 31 analysts are now forecasting revenues of US$27.0b in 2025. This would be a credible 4.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 9.9% to US$12.65. Before this earnings report, the analysts had been forecasting revenues of US$27.1b and earnings per share (EPS) of US$12.65 in 2025. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$322, suggesting that the company has met expectations in its recent result. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic McDonald’s analyst has a price target of US$360 per share, while the most pessimistic values it at US$280. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting McDonald’s is an easy business to forecast or the the analysts are all using similar assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that McDonald’s’ revenue growth is expected to slow, with the forecast 3.4% annualised growth rate until the end of 2025 being well below the historical 5.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that McDonald’s is also expected to grow slower than other industry participants.
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