Investors Not Lovin’ It: McDonald’s Q4 Earnings Could Be a McFlop

McDonald's Battles Weak Sales, Franchisee Concerns, and Wall Street Scrutiny in Crucial Q4 Report

Editorial Team (ET)May 9, 2025

McDonald's investors have had little to celebrate in 2024. The fast-food giant has faced sluggish sales, a disappointing stock performance, and an E. coli outbreak that dented consumer confidence. As the company prepares to release its fourth-quarter earnings report, set to publish on Monday before market open, analysts and investors alike are hoping this will mark the low point for the brand.

Citi analyst Jon Tower expressed a sentiment shared by many on Wall Street, stating that this quarter could be "the low point in recent history for the brand." The key question remains: Can McDonald's stage a comeback in 2025?

Earnings Expectations and Market Performance

Despite the hurdles McDonald's has faced, revenue is expected to inch slightly higher, coming in at an estimated $6.45 billion. Earnings per share are projected to reach $2.84, a decline from $2.95 in the same period last year. Global same-store sales are expected to drop by 0.91 percent, a stark contrast to the 3.40 percent growth recorded in the previous year.

Sales in the U.S. market are forecast to decline by 0.35 percent, while international-owned stores are expected to post a steeper drop of 1.22 percent. The underperformance in international markets, coupled with weaker domestic sales, underscores the broader challenges facing McDonald's as inflation, changing consumer habits, and competitive pressures weigh on its business.

McValue: The Key to a Turnaround?

McDonald's is banking on its McValue platform to reignite foot traffic in 2025. The company is set to introduce an expanded menu of affordable items, including chicken tenders, snack wraps, and a lineup of meal deals aimed at price-sensitive consumers. The strategy is clear: attract budget-conscious customers in an increasingly competitive fast-food landscape.

However, early indications suggest that McDonald's has an uphill battle ahead. January was particularly difficult, with severe weather conditions across key markets affecting sales. Analysts remain cautious about whether the McValue platform will truly drive incremental traffic or merely shift existing demand toward lower-margin offerings.

Franchise operators, who play a crucial role in McDonald's overall profitability, have voiced concerns over the growing reliance on aggressive discounts. David Costa, a Florida-based franchisee, acknowledged that while discounting could temporarily boost traffic, sustaining profitability remains a challenge. Many operators worry that if McDonald's conditions customers to expect constant promotions, it may become difficult to shift back to more profitable pricing strategies.

Wall Street’s Outlook on McDonald's Stock

Despite its recent struggles, some analysts believe McDonald's could rebound in the latter half of 2025. TD Cowen analyst Andrew Charles maintains that the company's performance will likely be "back-half-weighted," meaning improvements may not materialize until later in the year. Wedbush analyst Nick Setyan, who holds an Outperform rating on McDonald's stock, argues that softer year-over-year comparisons in the second half could make it easier for the company to post stronger results.

Others remain more skeptical. BTIG analyst Peter Saleh has warned that McDonald's growing dependence on promotions, including buy-one-get-one offers and in-app discounts, is putting significant pressure on margins. He noted that in January, roughly 35 percent of McDonald’s business was driven by steeply discounted or free offerings. This level of discounting, according to Saleh, makes it difficult for franchisees to maintain strong profitability.

What Comes Next for McDonald's?

With Wall Street divided on McDonald's near-term prospects, much will depend on whether the company can successfully implement its turnaround strategy. The McValue platform presents an opportunity to attract value-seeking customers, but if excessive discounting continues to erode margins, the company may face another challenging year.

The upcoming earnings report will provide critical insights into McDonald’s ability to navigate these challenges. Investors will be looking for signs of stabilization and any indication that the worst is indeed behind the company. If McDonald’s can deliver a stronger-than-expected outlook for 2025, confidence in the stock could start to rebuild. However, if weak sales trends persist, skepticism will likely remain high.

Conclusion

McDonald's is at a crossroads. The company has endured a rough year, but its long-term brand strength remains undeniable. Whether the McValue platform will be enough to reignite growth remains to be seen. For now, Wall Street is cautiously optimistic that the fast-food giant can turn the page on 2024 and chart a path toward recovery in the months ahead.

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