McDonald's Q1 Earnings Beat, Revenues Miss Estimates, Stock Down

McDonald's Corporation MCD reported first-quarter 2025 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The bottom line rose but the top line decreased year over year.

Following the results, the company’s shares are down 1.5% in today’s pre-market trading session.  The company’s results in the quarter were hurt by a decline in comparable guest counts.

Its long history of innovation, leadership and adaptability continues to position the company well, even in challenging market environments, according to Chairman and CEO Chris Kempczinski. He emphasized that while consumers are facing economic uncertainty, McDonald’s remains a reliable choice, offering a combination of beloved classics, new menu innovations and strong value from a brand that has earned their trust.

MCD’s Earnings & Revenue Discussion

In first-quarter 2025, McDonald's reported adjusted earnings per share (EPS) of $2.67, which surpassed the Zacks Consensus Estimate of $2.64. Adjusted earnings rose 1% year over year.

Quarterly net revenues of $5,956 million missed the consensus mark of $6,085 million. Additionally, the top line decreased 3% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

At company-operated restaurants, sales were $2.13 billion, down 9% year over year. Sales at franchise-operated restaurants amounted to $3.66 billion, which decreased 2% year over year. However, Other revenues rose 78% year over year to $162 million. Our model predicted sales by company-operated and franchise-operated restaurants to rise 1% and decline 1.2%, respectively, from the prior-year levels.

McDonald's Comps Details

In the quarter under discussion, global comps decreased 1% against 1.9% growth in the prior-year quarter. Our estimate was a 1.1% increase year over year.

Comps Across MCD’s Segments

United States: In the first quarter, segmental comps declined 3.6% against 2.5% growth registered in the prior-year quarter. The company's comparable sales for the quarter were impacted by the comparison to Leap Day in the prior year. Our model estimated the U.S. comps to increase 1%.

International Operated Markets: Segmental comps declined 1% against 2.7% growth in the year-ago quarter. Comparable sales showed varied performance across markets, with a notable drag from negative results in the United Kingdom. We anticipated an increase of 0.9% from the year-ago levels.

International Developmental Licensed Segment: Segmental comparable sales registered a 3.5% increase against a 0.2% decline in the prior-year quarter. The segment's performance was driven by positive comparable sales, with the Middle East and Japan leading the growth.

Operating Highlights & Expenses of McDonald's

In the first quarter, McDonald’s total operating costs and expenses were $3.30 billion, down 4% year over year.

Operating income dropped 3% year over year to $2.64 billion. Net income totaled $1.86 billion, down 3% year over year.

MCD’s Zacks Rank

MCD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Retail-Wholesale Releases

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The top-line growth was attributable to improved customer contract signings over the past 12 months, which were partially offset by sluggish underlying business activity. The bottom line was adversely impacted by higher fleet and transportation costs, along with increased labor costs.

Chipotle Mexican Grill, Inc. CMG reported mixed first-quarter 2025 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.

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Dave & Buster's Entertainment, Inc. PLAY reported fourth-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. Both metrics declined on a year-over-year basis.

Dave & Buster’s reported a weak fourth quarter but expressed confidence in its direction as recent trends show signs of improvement. The current leadership team is undoing several decisions made by prior management in marketing, operations and capital spending, and is returning to a more disciplined, fundamentals-driven strategy.

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