McDonald's Corporation MCD is slated to release first-quarter 2025 results on May 1, before the opening bell. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate.

MCD’s Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter earnings per share (EPS) has declined to $2.64 from $2.65 in the past seven days. The estimated figure indicates a 2.2% drop from the year-ago EPS of $2.70. The consensus mark for revenues is pegged at $6.08 billion, indicating a 1.4% year-over-year decline. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Factors Influencing MCD’s Q1 Performance

McDonald's is expected to report a year-over-year decline in revenues owing to weak traffic, particularly in the U.S. and many large international markets. The sluggish start to 2025, especially in January, can be attributed to economic pressure on low-income consumers, whose spending remains suppressed, negatively impacting traffic and average check sizes.

We expect total U.S. revenues to decline 0.9% year over year to $2,486.3 million. Revenues from total International Operated Markets are expected to be $2,927.1 million, indicating a 0.7% decline year over year. However, total International Developmental Licensed Markets & Corporate revenues are expected to increase 3.9% year over year to $645.5 million.

Strong digital adoption, innovative menu offerings and strategic unit expansion bode well. The company's ability to drive higher average checks through well-planned menu price increases, combined with effective restaurant execution and compelling marketing campaigns, is likely to have bolstered same-store sales. Additionally, the continued momentum in digital and delivery channels and the successful implementation of the Accelerating the Arches strategy positions McDonald's for another strong performance.

Our model predicts that the U.S. and International Operated Markets comps are likely to increase 1% and 0.9%, respectively.

The company’s first-quarter 2025 bottom line is likely to have been hurt by persistent pressure from elevated commodities and wages. Given the inflationary headwinds, the company’s operating margin is likely to have been under pressure in the quarter to be reported.

What the Zacks Model Unveils for MCD

Our proven model predicts 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 odds of an earnings beat. This is exactly the case here.

MCD’s Earnings ESP: McDonald's has an Earnings ESP of +0.06%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

MCD’s Zacks Rank: The company carries a Zacks Rank #3 at present.

Other Stocks Poised to Beat Earnings

Here are some other stocks you may consider, as our model shows that these, too, have the right combination of elements to beat on earnings this season.

CAVA Group, Inc. CAVA currently has an Earnings ESP of +0.87% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for first-quarter 2025 EPS is pegged at 14 cents, which implies a 16.7% increase year over year. The consensus estimate for CAVA’s quarterly revenues is pegged at $330.6 million, which indicates growth of 27.6% from the figure reported in the prior-year quarter. CAVA reported an earnings surprise of almost 62.6%, on average, in the trailing four quarters.

Dutch Bros Inc. BROS has an Earnings ESP of +2.81% and a Zacks Rank of 3 at present. In the to-be-reported quarter, Dutch Bros earnings are expected to register an 11.1% year-over-year decrease.

Dutch Bros earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 169.9%.

Deckers Outdoor Corporation DECK currently has an Earnings ESP of +8.32% and a Zacks Rank of 3.

In the to-be-reported quarter, Deckers’ earnings are expected to decrease 32.5%. Deckers’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 36.8%.

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McDonald's Corporation (MCD) : Free Stock Analysis Report

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CAVA Group, Inc. (CAVA) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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