McDonald's Q2 earnings set to benefit from value promotions and innovation

UBS analysts anticipate McDonald's will report solid Q2 earnings, projecting revenue of $6.7 billion (+3.5% YoY) and EPS of $3.15 (+6% YoY), primarily driven by strong US same-store sales growth (2.5% projected) fueled by value promotions and strategic international initiatives. The firm expects this positive momentum, coupled with foreign exchange tailwinds and defensive characteristics, to continue through H2 2025, supporting market share gains and earnings stability despite a volatile macro environment and mixed international performance. UBS reiterates a Buy rating with a $350 price target.

Analysis

Based on a UBS research note, McDonald's Corporation is positioned for a solid second-quarter earnings report, underpinned by strategic successes in key markets. Wall Street consensus anticipates revenue of $6.7 billion, a 3.5% year-over-year increase, and earnings per share of $3.15, up 6% YoY. In the United States, same-store sales are projected to grow 2.5%, driven by effective value promotions such as the Minecraft Meal. This momentum is expected to persist into the third quarter, catalyzed by the reintroduction of the popular Snack Wraps at a compelling $2.99 price point. Internationally, performance is more varied, though still positive overall; UBS projects 3.8% same-store sales growth for International Developmental Licensed Markets and 2.0% for International Operated Markets. While France shows gains from strategic initiatives and Germany is capturing market share, the broader eating-out market in Germany and conditions in the United Kingdom remain challenging. Despite these regional pressures and a volatile macroeconomic backdrop, McDonald's defensive characteristics, coupled with foreign exchange tailwinds, are expected to support market share gains and provide earnings stability for the second half of 2025, reinforcing the UBS Buy rating and $350 price target.

Key Decisions for Investors

• Investors should note the positive pre-earnings sentiment, with catalysts like US value promotions and FX tailwinds potentially supporting the 17% upside implied by the UBS price target.
• Pay close attention to the official same-store sales growth figures in the August 6th report, particularly verifying if US growth meets the 2.5% estimate and assessing the performance across the uneven international markets.
• Scrutinize management's forward-looking commentary for insights on the Q3 start, especially regarding the performance of the newly returned Snack Wraps, which is viewed as a key domestic catalyst.
• Investors should weigh the positive domestic outlook against the noted headwinds in key international markets like the UK and Germany, as prolonged weakness there could temper overall growth expectations.