McDonald's (MCD) Options: Earnings Volatility Ahead?

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The short-term outlook for MCD is slightly bearish. While the general market context is neutral due to the lack of relevant macro news, two pieces of company-specific news warrant a negative adjustment. The first article mentions MCD is among the companies reporting earnings this week, increasing volatility. The second and more impactful article suggests a potential visitor slump in Q3. This negative visitor data could pressure the stock if confirmed during the earnings release. The article speculates that value meals and the Monopoly promotion might positively influence guidance, but this is speculative. Given the potential negative earnings catalyst and the visitor slump, a bearish outlook is justified. Options traders should consider strategies that profit from a potential price decrease or increased volatility in the next 1-2 weeks, especially around the earnings announcement.

MCD's technical outlook is mildly bearish. The stock closed at $299.18 on 2025-11-04, which is below its 50-day SMA of $305.32 and its 21-day EMA of $303.32, indicating a potential downtrend. The MACD at -0.647 is below its signal line (0.189), and the MACD histogram is negative (-0.836), further reinforcing the bearish signal. The RSI of 37.65 suggests the stock is approaching oversold conditions, but not quite there yet. ADX is at 22.16 indicating a weak trend. The Stochastic Oscillator (21.49) is also quite low and trending downwards, suggesting continued downward momentum. The ROC20 is slightly positive at 0.11, but this lagging indicator is not enough to offset the negative signals from other indicators. The price has been fluctuating below the 50-day SMA since late September, and recent price action shows a failure to sustain any significant upward momentum. Given these indicators, the stock is likely to continue its downtrend or consolidate at lower levels in the coming 1-3 months.

McDonald's management discussion presents a generally positive but nuanced outlook. For the quarter ended June 30, 2025, consolidated revenues increased 5% (4% in constant currencies) to $6,843 million. However, for the six months ended June 30, 2025, total revenues only increased 1% (1% in constant currencies) to $12,799 million. The company’s systemwide sales increased 8% (6% in constant currencies) for the quarter and 4% (4% in constant currencies) for the six months, indicating growth is still occurring. The company's franchised margins represented approximately 90% of restaurant margin dollars. The company expects net restaurant unit expansion will contribute slightly over 2% to 2025 Systemwide sales growth, in constant currencies. A key risk factor identified is the 'negative impact on Systemwide sales and revenue' due to the war in the Middle East, particularly affecting International Developmental Licensed Markets. They expect 2025 operating margin percent to be in the mid-to-high 40% range. The company also expects 2025 capital expenditures to be between $3.0 and $3.2 billion, with the majority directed towards new restaurant unit expansion across the U.S. and International Operated Markets.

The McDonald's Q2 2025 earnings call presents a moderately bullish, albeit cautious, outlook. Global system-wide sales grew over 6% in constant currency, and global comparable sales increased nearly 4%, including positive guest counts despite industry challenges. CEO Chris Kempczinski highlighted that 'when we get our value proposition right and execute with excellence, good performance follows'. The company is focusing on value and affordability, with EDAP menus and meal bundles gaining traction in IOM markets. In the U.S., comparable sales were up 2.5%, outperforming near competitors. However, management remains cautious about the U.S. consumer, noting that QSR traffic, especially among low-income consumers, is still challenged with visits declining by double digits. CFO Ian Borden reiterated the full-year adjusted operating margin target in the mid- to high 40% range, above 2024's 46.3%, but adjusted the margin target for company-operated restaurants to around 14.8%, the 2024 level. The company remains on track to open approximately 2,200 restaurants globally this year, with slightly over 4% unit growth expected. The call suggests that McDonald's is navigating a mixed environment effectively, with international strength offsetting some U.S. headwinds.

McDonald's (MCD) demonstrates a generally positive financial trend. Revenue has fluctuated, starting at $6,692.0M in Q3 2023 and reaching $6,843.0M in Q2 2025, indicating a modest increase. Gross profit margins have remained relatively stable, around 56-57%. Operating cash flow is strong, with the latest quarter showing $1,998.0M. However, total debt has increased from $49,749.9M in Q3 2023 to $55,867.0M in Q2 2025, suggesting increased leverage. Despite the rise in debt, the company continues to generate substantial operating cash flow and maintain consistent profitability. Net income also shows a healthy trend, with $2,317.1M in Q3 2023 and $2,253.0M in Q2 2025. The company's ability to consistently generate free cash flow, with $1,254.0M in the latest quarter, supports its dividend payouts and share repurchases. Overall, the company's financial health appears robust, although the increasing debt should be monitored.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.