McDonald's Q4 Earnings: Is the Beat Priced In or a Surprise?

The market is braced for a modest beat on McDonald's upcoming report, but the real test is whether this reality aligns with what's already priced in. The setup is defined by a recent miss and a stock that has significantly lagged the broader market, creating a clear expectation gap.

The context is set by the third-quarter earnings released in November. McDonald's reported an EPS of $3.22, which missed the consensus estimate of $3.33. That $0.11 shortfall, coupled with revenue that also came in below expectations, was a tangible disappointment. Yet the stock's reaction was muted, closing up more than 2% that day. This "sell the news" dynamic hinted that the miss was already anticipated, a classic case of a negative surprise being partially priced in.

Against that backdrop, the stock's performance over the past year is telling. Despite resilient operational metrics, MCD has severely underperformed. Shares are up only about 8.7% over the last 52 weeks, a stark contrast to the S&P 500's 19.7% gains. The company's own CEO has acknowledged pressures, noting that "pressures will continue well into 2026." This underperformance, even as the company delivered a 2.4% U.S. same-store sales growth in Q3, shows investors have been skeptical about the sustainability of growth and the company's ability to navigate customer shifts.

Now, the market turns to the next test. The upcoming Q4 earnings date is February 9, 2026. The consensus forecast is for a profit of $3 per share, representing a 6% year-over-year increase. This is a modest beat against a low bar set by the prior-year quarter. The expectation is for a clean print, but the real arbitrage opportunity lies beyond the headline number. The market will be scrutinizing guidance and the trajectory for 2026 to see if the company's cautious outlook is justified or if management is sandbagging. For a stock that has been left behind, a simple beat may not be enough to close the expectation gap.

What's Already Priced In: Valuation and Market Sentiment

The market's baseline expectations are clear in the numbers. McDonald's trades at a P/E ratio of 26.40, a valuation that prices in steady, if not spectacular, growth. Analysts project next year's earnings will rise 8.24%, from an expected $12.25 to $13.26 per share. This multiple suggests investors are willing to pay up for reliability, but not for a sudden acceleration. The upcoming Q4 report must meet or exceed this steady-growth narrative to avoid a disappointment.

The consensus EPS estimate for the quarter is $3.00, a 6% year-over-year increase. Yet, the whisper number could be higher. The company's operational momentum in Q3 was notable, with U.S. same-store sales growing 2.4% and global sales up 3.6%. If that strength carried into the holiday quarter, the actual print might edge above the $3.00 consensus. A beat here would be a positive surprise, but the real test is whether it's enough to reset the trajectory.

The stock's severe underperformance tells the deeper story of sentiment. Shares are up only about 8.7% over the past year, a stark lag against the S&P 500's 19.7% gains. This divergence shows investors are pricing in the CEO's warning that "pressures will continue well into 2026." The market has already discounted a period of operational headwinds. For a stock that has been left behind, a simple beat on the Q4 number may not be enough to close the expectation gap. The real arbitrage opportunity lies in a "beat and raise" – where the quarterly print exceeds the $3.00 mark and management provides guidance that signals the pressures are easing sooner than feared. Without that reset, the valuation multiple may remain stuck.

Drivers of the Beat: Growth in a Challenging Market

The expectation gap hinges on whether McDonald's can deliver a beat driven by genuine operational strength, not just a low bar. The core drivers for a positive surprise are clear: resilient global sales, a powerful expansion engine, and a targeted plan to reclaim lost customers.

First, the company's global footprint is showing remarkable resilience. In the third quarter, McDonald's reported 3.6% same-store sales growth globally, a standout performance that outpaced a flat U.S. fast-food sector. This momentum, which included a solid 2.4% U.S. growth, suggests the brand's value proposition is holding firm even as industry traffic trends have declined. If this strength carried into the holiday quarter, it provides a direct path to beating the $3.00 EPS consensus. The market is pricing in steady growth; a beat here would confirm that the company's operational engine is running hotter than expected.

Second, the company is executing a historic expansion strategy that is a key lever for future revenue and franchise fees. McDonald's has laid out an ambitious plan to open 10,000 new stores by 2027, a growth rate that would be the fastest in its history. The company is on track to meet its 2025 targets, with over 44,000 locations today and a goal of 50,000 globally by 2027. This aggressive build-out is a powerful growth platform that is not yet fully reflected in the stock's valuation. For a beat to be sustainable, the market will need to see that this expansion is translating into new, profitable locations and that the company is on track to hit its ambitious store count goals.

Finally, management has a dedicated platform, McValue, aimed at winning back a crucial but lost customer segment. The CEO has acknowledged the company has lost almost 10% of its lower-income patrons and is now deploying value deals like Extra Value Meals and the Daily Double to reclaim them. Early signs are promising, and these initiatives are partly credited for the strong international performance. The key risk is margin pressure from these deals, but the company has shown it can manage that, with total restaurant margin dollars climbing 4% last quarter. A successful McValue rollout could drive traffic and sales growth that the market is not fully anticipating.

The bottom line is that the drivers for a beat are in place. Global sales are strong, the expansion engine is firing, and a targeted customer recovery plan is underway. For the stock to move meaningfully, the Q4 print must not only meet the $3.00 mark but also provide evidence that these drivers are accelerating, setting the stage for a guidance reset in 2026.

The Guidance Reset: What Could Move the Stock

The market has priced in steady growth, but the real move for McDonald's stock will come from a shift in the forward view. With a P/E ratio of 26.40 and next year's earnings expected to rise 8.24%, the valuation already discounts a reliable, if unspectacular, path. Any deviation from that trajectory-either a beat on the Q4 print or, more importantly, a guidance reset-could trigger a re-rating.

The key watchpoint will be management's commentary on 2026 pressures and growth targets. The CEO has explicitly signaled challenges will continue, noting that "pressures will continue well into 2026." This caution sets a low bar for optimism. For a "beat and raise" to materialize, the Q4 report must not only meet the $3.00 EPS consensus but also provide concrete evidence that the company's initiatives are mitigating these pressures sooner than feared. The McValue platform, aimed at reclaiming lost lower-income customers, is a critical part of that story. Early signs are promising, but the market needs to see this translate into traffic and sales growth that supports higher margins and expansion plans.

The stock's severe underperformance-lagging the S&P 500 by a wide margin-shows investors have already discounted a period of headwinds. A simple beat on the quarterly number may not be enough to close the expectation gap. What could move the stock is a guidance reset that signals the pressures are easing and the ambitious expansion plan is on track. The company's goal to open 10,000 new stores by 2027 is a powerful growth lever, but its success hinges on execution and customer recovery. If management provides a 2026 outlook that suggests these drivers are accelerating, it could force a reassessment of the 8.24% earnings growth consensus and justify a higher multiple.

The bottom line is that the Q4 report is a setup for a guidance call. The market is braced for a modest beat, but the real arbitrage opportunity lies in a management team that either confirms the pressures are more persistent than expected or, more powerfully, signals they are already turning. For now, the stock's valuation suggests the latter is not priced in.

Catalysts and Risks: The Path to the Next Print

The path to the next print is now clear. The primary catalyst is the conference call scheduled on Wednesday, February 11, 2026. This is where the numbers from the February 9 report will be interpreted. Management's commentary on the Q4 results and, more critically, its forward guidance for 2026, will determine whether the market sees a beat or a reset. The call is the definitive event for closing or widening the expectation gap.

The key operational data point to watch is the effectiveness of the McValue platform. The company has lost almost 10% of its lower-income patrons and is betting on value deals to reclaim them. Early signs are promising, but the market needs concrete evidence that these initiatives are driving traffic and sales growth that supports the ambitious expansion plan. Any update on customer retention metrics or the impact of deals like the Daily Double on margins will be a major signal. The platform is central to the thesis that pressures are being mitigated.

The main risk is a guidance cut or an acknowledgment of deeper consumer pressure that widens the expectation gap. The CEO has already warned that "pressures will continue well into 2026". If management confirms this caution is more severe than expected, or if it lowers the 2026 earnings growth consensus, it would likely pressure the stock. This would validate the market's skepticism and suggest the recent underperformance is not a temporary discount but a justified repricing for tougher conditions. For now, the stock's valuation suggests a more optimistic reset is not priced in. The February 11 call will tell us if that expectation is about to change.