McDonald’s Q4 Revenue Beats Expectations: Low-Price Strategy Is Becoming an “Anti-Cyclical Engine” Under Consumption Downgrading

TradingKey – McDonald's (MCD) reported fourth-quarter revenue of $7.01 billion, significantly beating analysts' expectations of $6.83 billion. Adjusted earnings per share were $3.12, also exceeding the projected $3.04.

[Source: MCD Earnings Report ]

U.S. same-store sales grew 6.8% year-over-year, marking the fastest growth rate in over two years. Following the earnings release, shares rose as much as 2% in after-hours trading before giving back those gains to end down 0.24%, potentially reflecting market caution regarding the sustainability of "value reliance" amid a backdrop of consumer weakness.

[McDonald's After-hours Performance, Source: Google Finance]

By strengthening its "high value-for-money" menu strategy, combined with the "Monopoly" sweepstakes and "The Grinch" themed marketing, McDonald's effectively attracted budget-conscious consumers, driving a simultaneous recovery in both foot traffic and average check size in the U.S. market.

Following the earnings announcement, Jefferies raised its price target for McDonald's (MCD.US) from $360 to $375.