McDonald’s Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component McDonald’s (NYSE:MCD) will unveil its latest earnings on Friday, October 19, 2012. 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 net income of $1.47 per share, a rise of 1.4% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $1.54. Between one and three months ago, the average estimate moved down. It has been unchanged at $1.47 during the last month. For the year, analysts are projecting profit of $5.41 per share, a rise of 2.7% from last year.

Past Earnings Performance: Last quarter, the company fell short of estimates by 0 cents, coming in at net income of $1.32 per share against a mean estimate of profit of $1.38. The company fell in line with expectations in the first quarter.

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Stock Price Performance: Between August 17, 2012 and October 15, 2012, the stock price had risen $6.14 (7%), from $87.36 to $93.50. The stock price saw one of its best stretches over the last year between July 25, 2012 and August 2, 2012, when shares rose for seven straight days, increasing 1.8% (+$1.55) over that span. It saw one of its worst periods between May 24, 2012 and June 4, 2012 when shares fell for seven straight days, dropping 5.7% (-$5.21) over that span.

A Look Back: In the second quarter, profit fell 4.5% to $1.35 billion ($1.32 a share) from $1.41 billion ($1.35 a share) the year earlier, missing analyst expectations. Revenue rose 0.2% to $6.92 billion from $6.91 billion.

Analyst Ratings: With 14 analysts rating the stock a buy, none rating it a sell and 10 rating the stock a hold, there are indications of a bullish stance by analysts.

Key Stats:

The company is looking to get back on track with this earnings announcement after a profit drop last quarter snapped a positive string of results. Net income rose 8.6% in the third quarter of the last fiscal year, 10.8% in the fourth quarter of the last fiscal year and 4.8% in the first quarter before declining in the second quarter.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 13.7% in the third quarter of the last fiscal year, 9.8% in the fourth quarter of the last fiscal year and 7.1% in the first quarter before increasing again in the second quarter.

Wall St. Revenue Expectations: Analysts are projecting a decline of 0.1% in revenue from the year-earlier quarter to $7.16 billion.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.24 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.

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

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