McDonald’s Fourth Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component McDonald’s (NYSE:MCD)¬†will unveil its latest earnings tomorrow, Wednesday, January 23, 2013. McDonald’s franchises and operates fast food restaurants worldwide.

McDonald’s Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for profit of $1.33 per share, no change from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $1.38. Between one and three months ago, the average estimate moved down. It has been unchanged at $1.33 during the last month. Analysts are projecting profit to rise by 0.9% versus last year to $5.32.

Past Earnings Performance: The company is looking to break the streak of missing estimates in the past two quarters. Last quarter, it fell short of analyst expectations by reporting net income of $1.43 per share against an estimate of profit of $1.47 per share. The quarter before that, it missed forecasts by 6 cents.

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Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.01 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.24 in the second quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 14.6% to $4.15 billion while assets decreased 6.5% to $4.21 billion.

A Look Back: In the third quarter, profit fell 3.5% to $1.46 billion ($1.43 a share) from $1.51 billion ($1.45 a share) the year earlier, missing analyst expectations. Revenue fell 0.2% to $7.15 billion from $7.17 billion.

Here’s how McDonald’s traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

MCD

Analyst Ratings: With 14 analysts rating the stock a buy, none rating it a sell and 11 rating the stock a hold, there are indications of a bullish stance by analysts.

Key Stats:

On the top line, the company is looking to get back on the right track after last quarter’s drop snapped a string of revenue increases. Revenue rose 9.8% in the fourth quarter of the last fiscal year, 7.1% in the first quarter and 0.2%in the second quarter before dropping in the third quarter.

After experiencing income drops the past two quarters, the company is hoping to use this earnings announcement to rebound. Net income dropped 4.5% in the second quarter and then again in the third quarter.

Wall St. Revenue Expectations: Analysts predict a rise of 1% in revenue from the year-earlier quarter to $6.89 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)