McDonald’s (NYSE:MCD) has a promising future ahead as it gears up to lower prices in 2024. McDonald’s stock recently demonstrated robust financial performance, driven by a multiple of factors. This includes its growing loyalty rewards program, menu innovations, and enhanced digital capabilities.
Positive momentum will continue as the company introduces a price reduction strategy, which aims to attract a wider customer base and boost sales volume. With a focus on driving customer value and enhancing operational efficiency, McDonald’s stock is set to capitalize on emerging trends in the fast-food industry.
Strong Earnings Growth in Q1 FY24
McDonald’s stock recent Q1 FY24 earnings results highlight the company’s resilience and adaptability to a changing macroeconomic landscape. The company reported an increase in global comparable sales, driven by strong performance in both domestic and international markets.
Comparable sales increased 2% year over year), marking its 13 consecutive quarters of growth. This growth can be attributed to various factors, including successful marketing campaigns, menu innovations, and an enhanced digital presence.
Net income rose 7% YOY to $1.93 billion during the quarter. As McDonald’s prepares to lower prices, it remains well positioned to maintain a positive earnings growth trajectory.
Growing Loyalty Rewards Program
McDonald’s has been actively investing in its digital infrastructure to enhance customer engagement and drive its comparable sales. The company’s loyalty rewards program, MyMcDonald’s Rewards, has been rapidly expanding, with millions of active users across the globe.
MyMcDonald’s Rewards grew by more than 45% in 2023, with system-wide sales surpassing $20 billion. It is one of the largest rewards programs in the world, with more than 150 million active members.
This program offers customers personalized deals and exclusive rewards, incentivizing them to visit McDonald’s more frequently. Additionally, McDonald’s has been expanding its partnership with Google Cloud.
The partnership will enable it to leverage advanced data analytics and artificial intelligence to gain deeper insights into customer behavior and preferences.
McDonald’s Stock Valuation Is Cheap
McDonald’s stock has a number of positive tailwinds going for the business in 2024. The company plans to lower prices, and their growing loyalty rewards program is boosting comparable sales in both domestic and international markets.
Furthermore, their earnings growth trajectory remains positive as it prepares to ramp up its restaurant expansion through 2027.
Trading at 21 times forward earnings, MCD stock seems relatively cheap based on their long term growth prospects. Discerning investors will take advantage of the weakness with the stock down 13% in 2024.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
