McDonald's stock falls 3% after earnings and revenue miss estimates

McDonald's on Tuesday reported earnings that fell short of estimates for the first time in two years as its promotions struggled to lure U.S. customers away from the competition.

Shares of the company fell more than 3% in morning trading. McDonald's stock, which has a market value of $156 billion, is up 14% so far this year. Shares of rival Wendy's, valued at $5 billion, are up 38% in the same time period.

The fast-food giant reported fiscal third-quarter net income of $1.6 billion, or $2.11 per share, unchanged from $1.6 billion, or $2.10 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings per share of $2.21.

Net sales rose 1% to $5.4 billion, narrowly missing expectations of $5.5 billion. The company reported global same-store sales growth of 5.9%, thanks to strong performance in its international markets.

U.S. same-store sales grew by 4.8% during the quarter, falling short of Wall Street's estimates of 5.2%. The United States accounts for more than a third of the company's total revenue. McDonald's said national and local promotions, menu price increases and tech-focused upgrades to stores drove domestic same-store sales growth. The company has been renovating U.S. stores with features that usually encourage customers to spend more, like self-order kiosks and digital menu boards.

Traffic to U.S. locations, however, continues to decline.

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $2.11 vs. $2.21 expected
• Revenue: $5.4 billion vs. $5.5 billion expected
• Global same-store sales: 5.9% vs. 5.6% expected

McDonald's competition has been generating more buzz when it comes to menu additions. With some help from social media, Popeyes Louisiana Kitchen, which is owned by Burger King's parent Restaurant Brands International, sold out of its chicken sandwich in less than a month after its launch this summer.

Burger King has also been stealing some spotlight from McDonald's with the nationwide launch of its plant-based Impossible Whopper. In September, McDonald's announced plans to test a burger made with a Beyond Meat patty in select restaurants in Ontario, Canada.

As McDonald's aims to hit $4 billion in global delivery sales this year, the fast-food chain has been expanding its delivery program. The company now has delivery partnerships with UberEats, DoorDash and GrubHub. McDonald's delivery is popular with its overseas customers.

The company's international operated segment, which includes top markets like Germany and France, reported same-store sales growth of 5.6% during the quarter, in line with Wall Street's estimates. That business makes up more than half of the chain's total sales.

Restaurants in McDonald's smaller international licensed segment, which includes Brazil, China and South Korea, saw same-store sales growth of 8.1%.

Read McDonald's full release here.

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