McDonald's Pops Despite Q3 Earnings Miss

"McDonald's Corporation reported third-quarter earnings this morning that fell short on both fronts. The company posted adjusted earnings per share of $3.22 against consensus expectations of $3.36, missing by 4.2%. Revenue came in at $7.078 billion, trailing the $7.166 billion estimate by 1.2%. The stock opened lower in early trading as investors digested results that suggest momentum is slowing after a stronger first half of 2025."

"The core issue here is comparable-store sales growth. McDonald's reported a slowdown in traffic and ticket growth across key markets, with comparable sales declining in the United States and several international regions. The company attributed some weakness to consumer spending pressures, particularly among lower-income customers who make up a meaningful portion of the customer base. This is significant because comparable sales are the clearest signal of underlying business health for a mature restaurant operator."

"McDonald's trades at a premium multiple relative to its growth rate. With trailing twelve-month revenue growth of just 5.4% and quarterly earnings growth of 12.1%, the forward P/E of 22.6 leaves limited room for disappointment. Today's miss suggests the company may face headwinds in the near term as consumer spending remains uneven. The analyst consensus target of $330.10 implies 10% upside from current levels, but that assumes stabilization in comparable sales and sustained profitability. A continued slowdown would pressure both assumptions."

McDonald's reported third-quarter adjusted EPS of $3.22 versus $3.36 expected and revenue of $7.078 billion versus $7.166 billion expected, causing the stock to open lower. Comparable-store sales slowed with declines in the United States and several international regions as traffic and ticket growth weakened, partly due to consumer spending pressures among lower-income customers. Operating margins remained relatively steady, reflecting pricing power and operational efficiency, but margin stability did not offset top-line deceleration. The shares trade at a premium multiple—forward P/E 22.6—leaving limited room for disappointment given modest revenue and earnings growth. Analyst estimates assume comparable-sales stabilization and sustained profitability.

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