How reliable are MCD's earnings forecasts?

**MCD's earnings forecasts are generally reliable**, as evidenced by the following points: 1. **Consensus Estimates**: The consensus estimates for MCD's earnings and revenue have been provided by various analysts and financial institutions. These estimates are based on analysts' opinions, market conditions, and historical performance, which contributes to their reliability. 2. **Historical Performance**: McDonald's has a track record of surpassing consensus EPS estimates in the past, with the exception of a few quarters where the estimates were revised downward. This suggests that the company's performance is often in line with or exceeds analysts' expectations. 3. **Economic Factors**: The reliability of earnings forecasts can be influenced by economic factors such as inflation, consumer spending, and industry trends. McDonald's has been affected by these factors, with global comparable sales turning negative in the third quarter of 2024 due to budget-conscious consumers trading eating out for home-cooked meals. However, the company's strategic initiatives, such as menu innovation and value bundles, indicate a proactive approach to mitigating these challenges. 4. **Analyst Ratings and Price Targets**: The majority of analysts covering MCD have a "buy" or equivalent rating, with a consensus price target suggesting a potential upside from the current close. This positive sentiment among analysts can be an indicator of reliable earnings forecasts, as analysts are likely to maintain a positive outlook if they believe the company's performance will meet or exceed expectations. 5. **Estimate Revisions**: The direction of estimate revisions can be an indicator of the reliability of earnings forecasts. In the case of MCD, there have been some downward revisions in EPS estimates, which may reflect a more cautious outlook from analysts. However, these revisions do not necessarily imply that the earnings forecasts are unreliable, but rather that analysts are reassessing their initial projections. In conclusion, while there are some factors that can influence the reliability of MCD's earnings forecasts, such as economic conditions and analyst revisions, the consensus estimates, historical performance, and analyst ratings suggest that these forecasts are generally reliable. Investors should monitor any recent shifts in analyst projections and consider the broader economic context when evaluating the reliability of these forecasts.