We expect fast food giant
) to beat expectations when it reports fourth quarter and full
year 2012 results on Jan 23 before the opening bell.
Why a Likely Positive Surprise?
Our proven model shows that McDonald's is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
Earnings Surprise Prediction or ESP (Read: Zacks Earnings ESP: A
Better Method), which represents the difference between the Most
Accurate estimate which stands at $1.34 and the Zacks Consensus
Estimate that stands at $1.33, is at +0.75%. This is a meaningful
and leading indicator of a likely positive earnings surprise for
Zacks #3 Rank (Neutral):
McDonald's currently retains a Zacks Rank # 3 (Hold).
The combination of the stock's Zacks Rank #3 (Hold) and +0.75%
ESP makes us confident of a positive earnings beat this
What is Driving the Better Than Expected
After relatively weak performances in the recent past and a
monthly decline in Oct, (not seen in a decade), same-store sales
(comps) at McDonald's bounced back in Nov 2012.
In fact, the company had to resort to a series of initiatives to
counter comps slowdown. Re-emphasis on value menu as well as the
return of McRib limited time offering, in mid-December, is
expected to drive results this quarter.
Investors should note that McDonald's will likely face easy
comparisons across the globe as the year 2013 progresses.
Further, one of the company's recent products, "Mighty Wings",
currently on a test run, can see a national rollout in the near
future. This is expected to provide this Illinois-based fast food
operator with a shot in the arm.
Other Stocks to Consider
Other than McDonald's, we also see likely earnings beats
coming from three industry peers this earnings season.
AFC Enterprises Inc.
): Earnings ESP of +9.09% and Zacks Rank #1 (Buy).
Bob Evans Farms Inc.
): Earnings ESP of +3.90% and Zacks Rank #1 (Strong Buy).
Chuy's Holdings Inc.
): Earnings ESP of +25.00% and Zacks Rank #2 (Buy).
AFC ENTERPRISES (AFCE): Free Stock Analysis
BOB EVANS FARMS (BOBE): Free Stock Analysis
CHUYS HOLDINGS (CHUY): Free Stock Analysis
MCDONALDS CORP (MCD): Free Stock Analysis
To read this article on Zacks.com click here.