Mcdonald’s Sales Boost Stock Even as Average Customer Purchase Dips

McDonald’s Corp. reported its fourth-quarter adjusted earnings, which fell short of analysts’ expectations. However, despite the earnings miss, the company’s stock saw a notable increase as same-store sales outperformed forecasts and U.S. store traffic rose for the first time in several quarters. This mix of results left analysts with a balanced view of the company’s performance, highlighting both strengths and ongoing challenges.

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Stock Rises Despite Earnings Miss

Shares of McDonald’s (MCD) climbed 5% following the earnings report. Investors responded positively to the company’s better-than-expected same-store sales and encouraging signs of traffic growth in the U.S. This upward movement in the stock price suggests that the market focused more on the company’s operational progress than the slight earnings miss.

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Brian Yarbrough, an analyst at Edward Jones, described the quarter as “mixed,” noting that while there were bright spots, challenges persisted. He maintained a hold rating on McDonald’s stock, indicating a neutral stance given the combination of strengths and weaknesses.

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“Strength in international markets was mostly offset by continued weakness in the U.S.,” Yarbrough explained. While U.S. traffic growth was a positive sign, he pointed out that consumers are spending less per visit, contributing to the overall decline in U.S. sales. He also noted that the significant price increases across the restaurant industry in recent years have likely created a headwind, particularly for lower-income consumers who may be feeling the pinch of inflation.

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Earnings and Sales Breakdown

McDonald’s reported adjusted earnings of $2.83 per share for the fourth quarter, slightly missing the FactSet consensus estimate of $2.85 per share. Although the earnings figure was just shy of expectations, it wasn’t enough to dampen investor enthusiasm, especially given the positive trends in sales and customer traffic.

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On the sales front, same-store sales rose 0.4%, outperforming analyst projections, which had anticipated a decline of 1.1%. This growth was a key factor behind the stock’s strong performance after the earnings release.

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When broken down by region:

• U.S. comparable-store sales declined 1.4%, driven primarily by reduced spending per customer. Despite this, McDonald’s noted a slight increase in comparable guest counts, meaning more people were visiting its restaurants even if they were spending less per visit.
• In contrast, the International Developmental Licensed Markets segment posted a 4.1% increase in comparable-store sales, reflecting strong performance in markets outside the U.S.

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Revenue Performance

McDonald’s reported revenue of $6.39 billion for the quarter, which was roughly flat compared to the same period last year. This figure fell short of analysts’ expectations, as the consensus estimate had been $6.45 billion.

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While flat revenue growth might typically be seen as a concern, investors seemed to focus more on the underlying operational metrics, such as the rebound in U.S. traffic and the robust performance in international markets.

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One of the more concerning trends highlighted in the report was the continued weakness in the U.S. market. Although traffic improved slightly, the decline in average check size indicated that customers are becoming more price-sensitive.

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Yarbrough pointed out that the restaurant industry has implemented large price increases over the past few years, driven by rising costs for labor, food, and other inputs. These price hikes have likely deterred some budget-conscious consumers, particularly those in lower income brackets. This trend poses an ongoing challenge for McDonald’s as it tries to balance the need to cover costs while maintaining affordability for its core customer base.

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On the brighter side, McDonald’s continued to perform well in its international markets, particularly in the International Developmental Licensed Markets segment, which includes regions like China, Brazil, and parts of Europe. The 4.1% growth in comparable-store sales in this segment helped offset some of the weakness seen in the U.S.

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This strong international performance underscores McDonald’s global brand strength and its ability to adapt to different markets. The company’s efforts to tailor its offerings to local tastes and preferences, combined with strategic pricing and promotional campaigns, have contributed to this growth.

Including the gains from Monday’s trading session, McDonald’s stock is up 6.7% so far in 2025. This performance outpaces the broader market, as the S&P 500 has risen by 3% during the same period.

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The stock’s strong start to the year reflects investor confidence in McDonald’s ability to navigate a challenging economic environment, supported by its global presence and ongoing efforts to drive traffic and sales growth.

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While McDonald’s faces some headwinds in the U.S., particularly around consumer spending habits and pricing pressures, the company’s strong international performance and recent improvements in traffic provide reasons for optimism.

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Key areas to watch going forward include:

• Consumer spending trends in the U.S.: Will customers start spending more per visit, or will budget-conscious behavior persist?
• International growth: Can McDonald’s continue to capitalize on growth opportunities in key international markets?
• Menu innovations and pricing strategies: How will the company adjust its offerings and pricing to attract customers without sacrificing margins?

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Overall, while the fourth-quarter results were mixed, McDonald’s demonstrated resilience in the face of economic challenges, and investors appear to be betting on its ability to sustain growth in 2025 and beyond.

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