McDonald's Stock Jumps 4.6%--But Q1 Could Be Ugly Before the Comeback

McDonald's (MCD) stock jumped over 4.6% today, a surprising move given the company's recent struggles with U.S. sales. The fast-food giant reported weaker-than-expected U.S. sales, dragged down by an E. coli outbreak that hit its Quarter Pounder sales hard. Q4 revenue landed at $6.39 billion, slightly missing Wall Street's $6.44 billion target, while U.S. same-store sales fell 1.4%. However, management isn't sweating it, assuring investors that the impact is fading, with the worst likely behind them.



International markets carried the quarter, with McDonald's licensed markets seeing a 4.1% same-store sales boost. France, which had struggled for months, finally flipped back to positive growth. The company isn't waiting around to bounce back, either, rolling out 2,200 new locations this year, with 1,000 in China alone. Earnings per share for 2024 landed at $11.39, down just 1%, and McDonald's is banking on new menu additions, like snack wraps and chicken strips, to win back U.S. diners. The game plan? Lean into value deals while keeping margins intact, a tricky balance analysts are watching closely.

Short term, Q1 could be a slog, with McDonald's bracing for weak same-store sales. But beyond that, management expects a rebound as consumer sentiment improves and digital expansion continues. The loyalty program is already a powerhouse, with 175 million active users and counting. Investors will be watching how effectively McDonald's can turn promotions into long-term growth without sacrificing profitability. If the U.S. market can regain its footing, the stock's recent momentum could have real staying power.



In conclusion, McDonald's stock jump of 4.6% is a promising sign, but the company still faces challenges in the U.S. market. Management's confidence in the company's strategy and the expected rebound in consumer sentiment suggest that the stock's recent momentum could continue. However, investors should keep a close eye on the company's ability to execute on its growth strategies and maintain profitability in the coming quarters.