McDonald’s is geared up to report its third-quarter results on Tuesday morning against the backdrop of a recent increase in scrutiny after an E. coli outbreak linked to its Quarter Pounder burgers. The Centers for Disease Control and Prevention (CDC) issued a warning last week, associating 75 cases, one of them a fatality, with the diced onions that go in the burger. McDonald’s headlined by yanking the item out of its menu at 20% of its US locations. Still, it is rescheduling the re-release of the burger without onions once health authorities declare their non-GMO beef patties as consumption-safe.
Even though the company is dealing with reputation issues, the analysts had already predicted that the company would face a difficult situation in the earnings report because of the worldwide business recession.
Worldwide inflation has brought down the buying pattern among world consumers, which has played a part in a 0.6% drop in same-store sales for the third quarter of the year. United States of America’s market is still the shining light where McDonalds have attracted more customers with low-price deals such as a $5 combo meal, which the store introduced in June. This will boost the USA reports of the same store, which should increase by 0.5%.
Market Cap Holds at $210B: All Eyes on Q3 Report
McDonald’s stock has been taking a hit as it has declined by 6% since the outbreak news broke out, and at the same time, the stock has remained unchanged in the year to date and has a market cap of approximately 210 billion dollars.
The company’s approach to health-related crises and customer loyalty in a less-buoyant economic backdrop will be features that investors pay attention to as they await Tuesday’s report. Operations in the time-out phase will sheer to whether McDonald’s can add the growth path without any loss in public trust or not.
Mcdonalds Stock Chart Analysis
MCD/USD 15-Minute Chart
Valuing McDonald’s stock (NYSE: MCD), the current trading price is $296.79, which means that it is up by 1.43% on October 29, although it is still far from the highest point of the stock at $317.90, which was reached at the past. The stock, from a technical viewpoint, had a strong reaction in the form of a rally during the period of July to September when it rose from around $270 to above the $300 point. However, the investors’ continued positivity stopped when the E. coli crisis, which was also the reported E. coli outbreak with the retailer, overshadowed the company.
McDonald’s RSI stands at 43.05, which means that the stock is changing in the neutral to slightly oversold region. It could be a prospect for buying when the psychology stabilises. McDonald’s RSI levels were over 65 earlier this year. Yet, the RSI dip recently tells us that the market has lost some of its shine as a result of weaker sentiment, mostly due to some health issues and inflation-rise-related consumer cautiousness.
Analysts Expect 0.6% Drop in Global Sales
The upcoming McDonald’s Q3 earnings report has been a source of worry for analysts, who predict a 0.6% reduction in same-store sales worldwide as a consequence of the weaker international demand. Meanwhile, the US market holders remain confident that same-store sales should increase by 0.5%. They attribute this positive move to new offerings such as the $5 combo meal.
Technically, we will be tracking the $290 mark as the main support. In the event that McDonald’s can sustain that zone, a potential rally can be realised. Conversely, the underperformance of earnings may trigger a decline below $290, which can imply more downside. But earnings stick below $290; look out; it possibly could get worse.
The Q3 earnings report is among the things that one should pay attention to because it enables them to know what kind of steps the management to implement during a crisis and their forecast of US sales. Because of the $290 level, if Mcdonald’s remains above it, we might profess to buy even more—think about accompanying your profits to a loss if earnings have a good outlook!
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