McDonalds (MCD) is scheduled to report Q3 earnings before the open tomorrow and has a conference call is scheduled for 11:00 am ET.

Consensus estimates Q3 adj. EPS of $1.76 (vs. $1.62 last year) on revs of $5.74 bln (-11% Y/Y). 

  • Estimate for Q3 comps is for +4.7% 
    • EPS growth in the HSD (current expectations are for mid-teens growth in EPS)
  • Last earnings, MCD beat on EPS, comps, and revs
  • Currently shares are trading at a P/E 27x similar to SBUX (27x) while lower than competitors such as Wendy's (40x), QSR (92x), and YUM (36x). 

Earnings Growth Story and Mobile Integration

  • Franchise margin dollars are the ‘Biggest component' of MCD's income -- represents 75% of total restaurant margin dollars
  • Delivery pilot
    • Encouraged by UberEats partnership
  • Co says w/ 60% of orders being placed in the evening or late nights, that they're seeing an opportunity to serve customers during slower periods


On September 29, Telsey Advisory raised its target to $180 from $170 


MCD has enjoyed solid gains this year outperforming the DIA and the SPX. Recently however, the stock has tagged some resistance as some investors shoot against valuation concerns.