McDonald's Corporation (MCD - Free Report) is scheduled to report second-quarter 2023 results on Jul 27, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 13.9%.

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How are Estimates Placed?

The Zacks Consensus Estimate for earnings is pegged at $2.77 per share, indicating growth of 8.7% from $2.55 reported in the year-ago quarter. For revenues, the consensus mark is pegged at $6.22 billion. The metric suggests an improvement of 8.6% from the year-ago quarter’s figure.

Let's delve deeper.

Factors at Play

McDonald's second-quarter results are likely to gain from strong comps growth, menu innovation, expansion efforts, increase in average check growth and menu price. Robust digitalization is an added positive. Our model predicts the company’s U.S and international comps to increase 7% and 7.8% year over year, respectively.

McDonald’s is consistently trying to improve its performance in Australia, Canada, France, Germany and the U.K. MCD intends to drive comps growth in these markets by introducing value meals, customizing menu to local tastes, reimaging of restaurants, efficient marketing and promotions, improved service and increased convenience via delivery and digitalized presence.

We expect the U.S. segment’s total revenues in second-quarter 2023 to be up nearly 8.8% year over year to $2,575.6 million. Our model estimates total international operated markets revenues to decline 2.8% year over year to $2,643.9 million.

However, margins in second-quarter might have suffered due to continued pressure from elevated costs for commodities and wages. Management expects to witness food and paper inflation in 2023 in the mid-to-high single digits.

McDonald's Corporation Price and EPS Surprise

McDonald's Corporation price-eps-surprise | McDonald's Corporation Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for McDonald's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

McDonald's has an Earnings ESP of -1.05% and a Zacks Rank #2.

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