On Tuesday, McDonald's (NYSE:MCD) will release its quarterly report, and shareholders have grown increasingly optimistic that the fast-food giant can break out of a long funk and start delivering better financial results. Even though intense competition with Yum! Brands (NYSE:YUM), Starbucks (NASDAQ:SBUX), and a host of other players in the restaurant industry has taken its toll on McDonald's over the years, the company behind the Golden Arches still has opportunities to use its global brand power to bolster growth in coming years.

As with many multinational corporations, McDonald's faces a much different environment domestically compared to its worldwide prospects. Same-store sales declines have plagued the company repeatedly in its recent history, as a fully saturated restaurant market and the rise of fast-casual competitors have combined to make it hard for McDonald's to grow in the U.S. market. Yet it has also seen obstacles to international growth, and with emerging-market economies on uncertain ground, it's unclear whether McDonald's can count on a rising consumer class to push its overall results higher. Let's take an early look at what's been happening with McDonald's over the past quarter and what we're likely to see in its report.

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Source: McDonald's.

Stats on McDonald's

Analyst EPS Estimate

$1.24

Change From Year-Ago EPS

(1.6%)

Revenue Estimate

$6.73 billion

Change From Year-Ago Revenue

2%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Can McDonald's earnings get any higher?
In recent months, analysts have again pushed down their views on McDonald's earnings, cutting first-quarter estimates by a nickel per share and their full-year 2014 and 2015 projections by double and triple that amount, respectively. The stock has rebounded, though, rising 6% since mid-January.

McDonald's fourth-quarter results didn't live up to the hopes that shareholders had for the restaurant chain, instead showing the struggles it faces on multiple fronts. Same-store sales dropped 1.4% in the U.S. and 0.1% globally, with the Asia-Pacific region being hit especially hard. For the full year, comps in the U.S. dropped by 0.2%, with McDonald's blaming a glut of promotional product introductions, a loss of emphasis on value, and the rise of breakfast competition for its domestic woes.

Unfortunately, early signs suggest McDonald's faced many of the same problems in the first quarter of 2014. January's same-store sales were up 1.2% globally, with international comps rising at the expense of a mammoth 3.3% drop in U.S. comps. In February, though, international comps weakened considerably, with Asia-Pacific falling 2.6% even as domestic comps were down 1.4%.

The main culprit has been competition, as Yum!, Starbucks, and others all ramp up plans to expand their presence in the breakfast market. McDonald's has about 25% market share in that space, which researchers at Technomic estimate is about a $50 billion market. In response, McDonald's could well reconsider whether to change its hard-line stance on ending breakfast hours at 10:30 a.m., especially as Yum! Brands' Taco Bell serves breakfast until 11 a.m. -- and has a novelty factor that could help boost Yum!'s sales over McDonald's, at least in the short run.

Obviously, McDonald's has to respond with initiatives of its own. But it has to walk a fine line between keeping customers happy and meeting the needs of its franchisees. For instance, the free-coffee promotion that McDonald's started recently was aimed at preventing the rival breakfast offerings of Taco Bell and other competitors from stealing market share. But a recent industry survey found that franchisees assessed the promotion as failing to drive the increased sales that McDonald's corporate office had hoped to see.

In the McDonald's earnings report, watch for same-store sales results and how McDonald's various geographical areas are doing. Without responding better to the changing dynamics of the fast-food industry, McDonald's will have trouble rediscovering a realistic long-term growth trajectory.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends McDonald's and Starbucks. The Motley Fool owns shares of McDonald's and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.