Large portion of reporting yesterday companies sadly missed their earnings figures, with most disappointments coming from 3M (NYSE:MMM), McDonald's (NYSE:MCD) and even biotech Pfizer (NYSE:PFE). Oil tumbled through the session, with West Texas Intermediate crude dropping as much as 1.5%, to $41.10 per barrel.
McDonald’s has always managed to scramble through recessions posting strong financial numbers. This time was different. Wall Street expected McDonald’s to report quarterly earnings at 74 cents per share on revenue of $3.68 billion, but McDonald’s only managed to post its Q2 diluted earnings at 65 cents per share, dropping 67% from the same period a year ago and missing market estimates. As a result, McDonald’s shares fell 2.5% to $196.24 at yesterday’s market close.
Also, contributing to bad news, the fast-food chain's revenue in the past three-month period dropped 30% on an annual basis to $3.76 billion. Meanwhile, operating income plunged 58% to $961 million. The company’s global comparable sales also significantly fell by almost 24% amid sluggish demand caused by the coronavirus pandemic.
This sad story suggests there is no escape from economic slowdown, and we must rethink the entire universe of formerly considered defensive instruments.
One of the less-talked-about but more potent beneficiaries of this year’s gold rally Kinross Gold (NYSE:KGC) is scheduled to announce Q2 earnings results today, on July 29th, after market close.
The consensus EPS estimate is 13 cents and the consensus revenue estimate is around $1 billion (assuming a 20% growth YoY). Over the last 2 years, Kinross Gold has beaten EPS estimates 63% of the time and has beaten revenue estimates 50% of the time. Kinross is gaining from higher production at its two main deposit fields, which already showed strong momentum in this year’s first quarter. Robust production is likely to have continued in the second quarter. Further, gold prices have been soaring this year making it the most attractive safe-haven asset. Gold prices have gained around 13% in the second quarter—the highest quarterly percentage increase in more than four years.
by Vladimir Rojankovski, Senior Analyst, Grand Capital