McDonald's Q2 Earnings Set to Reveal Value Strategy Impact

McDonald's is gearing up for its Q2 earnings report on August 4th. The company has a history of beating consensus estimates, having done so in three of the last four quarters with an average surprise of 0.7%. For Q2, analysts expect McDonald's to report EPS of $3.32, a 4.1% increase from the same period last year.

The company's emphasis on value is expected to have driven sales growth. The revamped McValue platform has been successful in attracting budget-conscious consumers, and management says it's performing as expected. Marketing initiatives, including partnerships with Netflix and FIFA, are also likely to have contributed to the top line.

Menu innovation may have been another key driver of growth during the quarter. The rollout of McCafe beverages and limited-time offers across core menu categories are expected to have generated incremental demand. International markets, such as the U.K., Germany, and Australia, are also likely to have contributed through disciplined execution of value, marketing, and menu innovation.

Our model predicts total U.S. and international operated market sales to increase 1.5% and 8.1%, respectively, year over year. McDonald's bottom line is expected to be supported by solid sales leverage, its predominantly franchised business model, and disciplined cost management.