Nasdaq 100, Dow Jones, S&P 500: Q1 Earnings: GM, PepsiCo & McDonald’s Beat, UPS Misses

Highlights

• UPS shares plunge as Q1 earnings fall short of expectations
• General Motors beats Q1 expectations, raises 2023 outlook 
• McDonald’s reports higher-than-expected Q1 earnings and revenue

Overview

McDonald’s Beats Earnings Expectations Again

McDonald’s has reported higher-than-expected earnings and revenue for Q1 2023. The fast-food giant’s net income was $1.8bn, up from $1.1bn in the previous year. Excluding restructuring charges and other items, earnings per share were $2.63, exceeding expectations of $2.33. Meanwhile, revenue was $5.9bn, up 4% on last year and higher than the expected $5.59bn.

All three of McDonald’s divisions reported same-store sales growth of 12.6%. The company’s home market, the US, achieved same-store sales growth driven by higher menu prices and increased traffic. Notably, McDonald’s US traffic rose for the third consecutive quarter, defying the industry trend of slipping traffic as menu prices rise.

Historically, fast-food chains like McDonald’s have fared well during times of economic uncertainty as consumers trade down to its cheaper meals. Outside the United States, McDonald’s also exceeded same-store sales expectations. The international operated markets, which include the UK, France, Germany, and Australia, all achieved same-store sales growth higher than expected. Meanwhile, the international developmental licensed markets, including China and Japan, also topped same-store sales expectations.

GM Beats Expectations, Raises Outlook

General Motors (GM) reported first-quarter results that surpassed analysts’ expectations and raised its 2023 outlook. The carmaker reported adjusted earnings per share of $2.21, beating the expected $1.73, while revenue stood at $39.99bn, above the forecast $38.96bn. Despite the year-over-year decline in adjusted EPS, GM raised its 2023 earnings guidance to between $11bn and $13bn, up from a previous range of $10.5bn to $12.5bn, due to better-than-expected Q1 results. GM also raised expectations for adjusted automotive free cash flow to a range of $5.5bn to $7.5bn. The carmaker’s Q1 results included adjusted earnings of $3.8bn, down 6% from a year earlier.

PepsiCo Q1 Earnings Beat Expectations

PepsiCo has reported better-than-expected earnings and revenue for the first quarter of 2023, with net sales rising by 10.2% to $17.85bn. The firm’s full-year 2023 organic revenue outlook has been raised from 6% to 8%, while its core constant currency EPS outlook has increased from 8% to 9%. PepsiCo’s beverage business saw volumes rise by 1%, while they fell by 3% in its food division. Earlier this month, the firm announced a target of making 100% of its packaging recyclable, compostable, biodegradable or reusable by 2025.

UPS Misses Earnings, Shares Drop

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UPS shares plunged over 5% following the release of its Q1 earnings report, which fell short of analysts’ expectations. The company reported adjusted earnings of $2.20 per share on revenue of $22.93 billion, missing the expected earnings of $2.21 per share on revenue of $23.01 billion. CEO Carol Tome cited a “deceleration in U.S. retail sales” resulting in lower-than-anticipated volume and ongoing demand weakness in Asia. Tome added that they expect volume to remain under pressure given current macro conditions.

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