McDonald’s Earnings: Value Leader Performs Ably Despite Turbulent Backdrop; Shares Attractive

Wide-moat McDonald's continues to prove resilient despite widespread consumer pressure, with its strong value positioning, investments in core menu development, and digital acuity driving another quarter of healthy top-line performance. The firm's $6.69 billion in sales and $3.17 in diluted EPS comfortably edged our respective $6.29 billion and $2.70 EPS estimates, with nearly 9% global comparable store sales growth attesting to broad-based strength across the firm's 115-plus global markets. While results comfortably exceeded our quarterly forecasts, we expect to increase our $285 intrinsic valuation by just a low-single-digit percentage as we balance strong results, time value, and worse-than-expected traffic (slightly negative). More concretely, we expect to pull down our 2024 comparable store sales estimates by a couple of points across regions as the competitive environment intensifies, with competition for the breakfast daypart—roughly 25% of McDonald's sales—and for lower-income clientele remaining intense. Shares strike us as attractive.