On Friday, Loop Capital Markets maintained a positive outlook on shares of McDonald's Corporation (NYSE:MCD), reiterating a Buy rating and a price target of $342.00. The firm's analysis is based on recent checks with U.S. franchisees that suggest McDonald's same-store sales growth surpassed expectations in the third quarter.
According to the latest franchisee checks, same-store sales growth remained between 1.5-2.0% during the last three weeks of the third quarter and the initial weeks of the fourth quarter. This performance aligns with Loop Capital's estimate of 1.5% growth for the third quarter but exceeds the flat growth anticipated by the consensus.
While early fourth-quarter same-store sales growth is tracking below Loop Capital's previous forecast of 4.0%, it is slightly ahead of the consensus expectation of 1.3%. On a two-year stacked basis, the reported growth of 1.5-2.0% for the third quarter translates to an increase of 9.6-10.1%, which is consistent with or slightly better than McDonald's reported two-year stacks of 9.6% in the second quarter of 2024.
The implied three-year stacks of 15.7-16.2% represent a significant acceleration from the 13.3% three-year stacks reported by McDonald's in the second quarter. Loop Capital's continued endorsement of a Buy rating and a price target of $342 is based on 18 times their 2025 enterprise value/EBITDA estimate for McDonald's. The firm's stance reflects confidence in the fast-food giant's growth trajectory and financial performance.
In other recent news, McDonald's has witnessed a series of developments related to earnings, revenue, and analyst upgrades. Truist Securities increased its price target for McDonald's shares to $350, anticipating the company may outperform in Q3 2024.
Truist also raised its adjusted EBITDA forecast for McDonald's in the third quarter to $3.756 billion. McDonald's U.S. system sales are estimated to reach $13.7 billion in Q3 2024, slightly above the consensus estimate.
UBS raised its price target for McDonald's to $345, citing an improved U.S. sales trajectory. McDonald's has also been the focus of several other analyst upgrades, including KeyBanc raising its stock target to $330, maintaining an Overweight rating based on a strong sales outlook. Meanwhile, Citi raised its price target for McDonald's, maintaining a Neutral rating due to anticipation of a strong third-quarter performance.
However, McDonald's has faced disruptions to its supply chain due to a labor strike at U.S. ports, causing significant shortages in beef and seafood. In response, the company has increased its stock to ensure continuity of supply. These are the recent developments for McDonald's, providing crucial information for investors.
InvestingPro Insights
McDonald's Corporation's strong performance, as highlighted by Loop Capital Markets, is further supported by recent data from InvestingPro. The company's market capitalization stands at an impressive $225.75 billion, underscoring its dominant position in the fast-food industry.
InvestingPro Tips reveal that McDonald's has raised its dividend for 49 consecutive years, demonstrating a consistent commitment to shareholder returns. This aligns with the company's solid financial performance noted in the article. Moreover, the stock is trading near its 52-week high, which corroborates Loop Capital's positive outlook and Buy rating.
The company's revenue for the last twelve months as of Q2 2024 was $25.76 billion, with a revenue growth of 6.46%. This growth, coupled with a robust operating income margin of 45.67%, supports the franchisee reports of strong same-store sales growth mentioned in the article.
For investors seeking more comprehensive insights, InvestingPro offers 12 additional tips for McDonald's stock, providing a deeper understanding of the company's financial health and market position.
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