- Analysts predict a 2.2% decline in EPS from the previous year, forecasting $2.64 for Q1 2025.
- Revenue is projected to decrease by 1.4% to $6.08 billion, impacted by economic pressures on low-income consumers.
- Despite challenges, McDonald’s maintains strong financial fundamentals with a notable increase in free cash flow and effective debt management.
McDonald’s Corporation (NYSE:MCD) is a global fast-food giant known for its extensive menu and iconic golden arches. As it prepares to release its first-quarter 2025 earnings on May 1, analysts predict an earnings per share (EPS) of $2.64. This represents a 2.2% decline from the previous year’s EPS of $2.70, reflecting challenges in customer traffic and economic pressures.
Revenue for the quarter is projected to be $6.08 billion, a 1.4% decrease compared to the same period last year. This decline is largely due to economic pressures affecting low-income consumers, which contributed to a sluggish start to the year, especially in January. Despite these challenges, there has been a slight upward revision of 0.2% in the consensus EPS estimate over the past 30 days, indicating a reassessment by analysts.
McDonald’s maintains strong financial fundamentals, supported by its valuable real estate assets. This stability allows the company to manage debt effectively and navigate economic challenges. Despite historical revenue declines, McDonald’s has increased its free cash flow by controlling gross margins. However, the current stock price suggests that long-term returns may be modest.
The company’s financial metrics provide further insight into its valuation. McDonald’s has a price-to-earnings (P/E) ratio of approximately 27.41, indicating the price investors are willing to pay for each dollar of earnings. The price-to-sales ratio stands at about 8.68, reflecting the market’s valuation of its revenue. Additionally, the enterprise value to sales ratio is around 10.64, suggesting how the market values the company relative to its sales, including debt and excluding cash.
McDonald’s enterprise value to operating cash flow ratio is approximately 29.19, indicating the company’s valuation in relation to its cash flow from operations. The earnings yield is about 3.65%, providing insight into the return on investment. The debt-to-equity ratio is notably negative at -13.68, which may indicate a unique financial structure or accounting approach. Lastly, the current ratio is approximately 1.19, suggesting the company’s ability to cover its short-term liabilities with its short-term assets.
