McDonald’s Q3 Earnings Preview: Impact of E. Coli Outbreak and Expected Financial Performance

McDonald’s is set to release its third-quarter earnings before the market opens on Tuesday. According to Wall Street analysts surveyed by LSEG, the company is expected to report:

Earnings per Share (EPS): $3.20

Revenue: $6.82 billion

Executives will hold a conference call at 8:30 a.m. ET.

McDonald’s shares have dropped 6% since being linked to a deadly E. coli outbreak.

The earnings release comes a week after the Centers for Disease Control and Prevention (CDC) issued a warning about a deadly E. coli outbreak linked to McDonald’s Quarter Pounder burgers. As a result, the company temporarily removed the item from about one-fifth of its U.S. locations, but announced on Sunday that the burger will return to affected restaurants, now without slivered onions.

Health authorities have cleared McDonald’s fresh beef patties as the source of the outbreak, and the investigation is currently focused on the slivered onions used in the burger. As of Friday, the outbreak has been linked to 75 cases of illness, including one death of an elderly individual.

McDonald’s sales were already lagging before the outbreak. According to StreetAccount estimates, same-store sales are expected to decline by 0.6% in Q3, primarily due to weak international demand.

As inflation-strained consumers cut back on dining out, McDonald’s has introduced value menus and combo deals in several key markets. In the U.S., the chain launched a $5 combo meal in late June, and same-store sales are expected to rise by 0.5%.

Since the E. coli outbreak, McDonald’s stock has dropped 6%. Year-to-date, the stock remains roughly flat, with a market cap of approximately $210 billion.

Currently, McDonald’s stock is trading around $296.79, with strong support at $280. Resistance levels are seen at $302 and $318.