How to Trade McDonald's After Q2 Performance
McDonald's is the largest fast food brand in the world. This led to economists creating the Big Mac Index which is used as an indicator for the purchasing power in an economy. Therefore, investors and analysts pay attention to the earnings of McDonald's as it can also be used to learn more about economic health.
Learn more about McDonald's' second-quarter performance and what the analysts are forecasting for the stock.
| Stock: | McDonald's Corp. |
| Symbol for Invest.MT5 Account: | MCD |
| Date of Idea: | 31 July 2023 |
| Time Line: | 1 - 6 months |
| Entry Level: | $301.00 |
| Target Level: | $380.00 |
| Position Size for Invest.MT5 Account: | Max 5% |
| Risk: | High |
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose, as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
McDonald's Q2 2023 Performance
Here are some of the key highlights from the latest second-quarter earnings report from McDonald's:
- Earnings per share of $3.17 vs $2.79 expected
- Revenue of $6.5 billion vs $6.27 billion expected
- Net income of $2.31 billion up from $1.19 billion a year earlier
- Global same-store sales up 11.7% vs 9.2% expected
- The largest market, the US, same-store sales are up 10.3%
McDonald's posted an earnings report that beat analysts' expectations on most metrics. In its largest market, the United States, same-store sales have grown for the fourth consecutive quarter. According to CEO Chris Kempczinski, most of the sales came from the marketing efforts of its Grimace Birthday Meal offer.
In the earnings call, the CEO also stated that they are seeing good performance from those who earn less than $100,000 and those who earn less than $45,000. Higher interest rates and higher inflation have made more people in the economy become cost conscious.
International sales have also been strong with growth in the UK and Germany. France posted weaker sales largely due to store closures during the riots. The impact of higher inflation has led to higher traffic in McDonald's' stores.
However, with recent inflation data from the US showing signs of slowing, there is a chance that investors may have seen a cap in the future growth potential of McDonald's. While the share price is up for the year so far, it has struggled in recent months. The uncertainty is highlighted in the fact there is an increasing number of analysts moving to a hold rating as shown below.
McDonald's Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for a McDonald's stock forecast in the past 3 months, there are currently 19 buy, 6 hold and 0 sell ratings on the stock. The highest price level for a McDonald's stock forecast is $383.00 with the lowest price target at $305.00.
The average price target for a McDonald's stock forecast is $330.68.
An Example Trading Idea for the McDonald's Stock Price
An example trading idea for the McDonald's share price could be as follows:
- Buy the stock on a break above $301.00 to allow for volatility.
- Target just below the highest analyst price target of $380.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 McDonald's shares:
- If target is reached = $790.00 potential profit [($380.00 - $301.00) * 10 shares].
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering how the price has struggled over recent months.
Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in McDonald's stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy McDonald's Stock in 4 Steps
With Admirals, you can buy shares in companies like McDonald's with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the dashboard.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for your stock in the search window at the top right to view the live price chart.
- Click Create New Order from the bottom of the screen to open the trading ticket.
Click on the banner below to trade McDonald's stock today! ▼▼▼
Do You See the McDonald's Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance McDonald's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.
This means you can trade long and short to potentially profit from rising and falling stock prices.
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