Our forecast indicates that McDonald’s valuation is around $256 per share, which is 5% above the current market price of around $243. Look at our interactive dashboard analysis on McDonald’s pre-earnings: What To Expect in Q2? for more details.
(1) Revenues expected to be ahead of consensus estimates in Q2
Trefis estimates McDonald’s fiscal Q2 2021 revenues to be around $5.57 billion, above the $5.53 billion consensus estimate. McDonald’s Q1 2021 revenue grew by 9% to $5.1 billion as demand continued with the U.S. segment leading the growth. We expect the same momentum to continue in the second quarter of FY2021. Overall, we expect revenue of around $21.2 billion in FY2021. Our dashboard on McDonald’s revenues offers more details on the company’s segments.
(2) EPS likely to miss the consensus estimates
McDonald’s Q2 2021 earnings per share is expected to be $1.80 per Trefis analysis, below the consensus estimate of $2.08. The company’s net income margin fell in 2020 due to higher operational expenses. The reopening of restaurants, reduction in lockdown curbs, and lower operational expenses are expected to improve the earnings in 2021. Altogether, the company is likely to report an EPS of around $7.48 in FY2021.
(3) Stock price estimate 5% above the current market price
Going by our McDonald’s valuation, with an EPS estimate of around $7.48 and a P/E multiple of 34.3x in fiscal 2021, this translates into a price of $256, which is 5% above the current market price of $243.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
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