McDonald's Corporation MCD reported second-quarter 2026 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same.
McDonald's reported adjusted earnings per share (EPS) of $3.38, up 6% year over year, and beating the Zacks Consensus Estimate of $3.32 by 1.8%. Higher sales-driven franchised margins and other operating income supported the bottom line.
McDonald's Corporation Price, Consensus and EPS Surprise
McDonald's Corporation price-consensus-eps-surprise-chart | McDonald's Corporation Quote
Revenues increased 4% year over year to $7.10 billion but missed the consensus mark of $7.14 billion by 0.5%. Global comparable sales rose with positive growth across all three operating segments.
MCD Posts Positive Comparable Sales Across Segments
Global comparable sales increased 1.3% compared with 3.8% growth in the prior-year quarter. The United States recorded a 0.8% increase, driven by positive average check growth, including favorable product mix, partly offset by lower comparable guest counts.
International Operated Markets comparable sales rose 1.5%. Germany, Australia and the United Kingdom led the improvement, while France remained a drag. International Developmental Licensed Markets advanced 1.9%, supported by Japan and positive results across all geographic regions, partly offset by weakness in China.
McDonald’s Systemwide Sales Benefit From Scale
Global systemwide sales increased 5%, or 4% in constant currencies, to $37 billion. U.S. systemwide sales rose 2%, while International Operated Markets and International Developmental Licensed Markets increased 6% and 8%, respectively.
Loyalty remained an important demand driver. Across 70 loyalty markets, trailing 12-month systemwide sales to loyalty members increased more than 20% to $40 billion. The number of 90-day active loyalty users rose 13% to nearly 220 million at quarter-end.
MCD’s Q2 Revenue Growth Reflects Franchised Strength
Revenues from franchised restaurants increased 4% to $4.39 billion. U.S. franchised revenues rose 2%, International Operated Markets gained 5%, and International Developmental Licensed Markets and Corporate advanced 9%.
Sales from company-owned and operated restaurants increased 3% to $2.53 billion. U.S. sales declined 1%, while International Operated Markets rose 3%. Other revenues increased 6% to $182 million, reflecting contributions from technology-related fees and brand licensing arrangements.
McDonald’s Margins Rise Despite U.S. Cost Pressure
Franchised restaurant margins increased 4.3% to $3.71 billion and represented roughly 90% of total restaurant margin dollars. Growth reflected stronger sales across all segments and favorable currency translation in the international businesses.
Company-owned and operated restaurant margins rose 1.8% to $387 million. U.S. margins declined 6% to $91 million due primarily to ongoing inflationary cost pressures. International Operated Markets margins increased 3% to $285 million, as sales growth and currency benefits were partly offset by inflation.
MCD’s Operating Income Advances as SG&A Climbs
Operating income increased 3% to $3.34 billion, or 2% in constant currencies. Results included $52 million in pre-tax charges, primarily related to restructuring under the Accelerating the Organization initiative. Excluding current- and prior-year charges, operating income increased 4%.
Selling, general and administrative expenses increased 16.7% to $817 million. The rise primarily reflected higher employee costs, including incentive-based compensation, and expenses associated with the 2026 Worldwide Owner/Operator convention. Other operating income totaled $37 million compared with an expense of $29 million a year earlier, aided by higher gains on restaurant sales and excess properties.
MCD Maintains 2026 Expansion and Margin Outlook
McDonald’s expects net restaurant expansion to contribute about 2.5% to 2026 systemwide sales growth in constant currencies. The company continues to project a full-year operating margin in the mid-to-high 40% range and SG&A expenses of roughly 2.2% of systemwide sales.
Capital expenditures are expected between $3.7 billion and $3.9 billion. McDonald’s plans to open approximately 2,600 restaurants during 2026, generating about 2,100 net additions. Interest expense is projected to increase 4-6%, while the full-year effective tax rate is expected between 21% and 23%.
MCD’s Zacks Rank & Key Picks
MCD currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.
Five Below, Inc. FIVE presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 70.1%, on average. FIVE stock has gained 15.1% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Five Below’s 2026 sales and EPS indicates growth of 23.9% and 36.1%, respectively, from the year-ago period’s levels.
FIGS, Inc. FIGS has a Zacks Rank #2 at present. The company delivered a trailing four-quarter earnings surprise of 212.5%, on average. FIGS stock has declined 4.2% in the year-to-date period.
The Zacks Consensus Estimate for FIGS’ 2026 sales and EPS indicates growth of 15.5% and 36.8%, respectively, from the prior-year levels.
Dutch Bros Inc. BROS carries a Zacks Rank of 2 at present. The company delivered a trailing four-quarter earnings surprise of 31.6%, on average. BROS stock has risen 6.2% in the year-to-date period.
The Zacks Consensus Estimate for Dutch Bros’ 2026 sales and EPS indicates growth of 27% and 23.7%, respectively, from the prior-year levels.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
McDonald's Corporation (MCD): Free Stock Analysis Report
Five Below, Inc. (FIVE): Free Stock Analysis Report
FIGS, Inc. (FIGS): Free Stock Analysis Report
Dutch Bros Inc. (BROS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).