McDonald's (MCD) Dips More Than Broader Markets: What You Should Know
McDonald's (MCD) closed the most recent trading day at $190.92, moving -0.44% from the previous trading session. This change lagged the S&P 500's 0.34% loss on the day. At the same time, the Dow lost 0.5%, and the tech-heavy Nasdaq lost 0.73%.
Prior to today's trading, shares of the world's biggest hamburger chain had gained 0.51% over the past month. This has lagged the Retail-Wholesale sector's gain of 11% and the S&P 500's gain of 5.71% in that time.
MCD will be looking to display strength as it nears its next earnings release, which is expected to be July 28, 2020. The company is expected to report EPS of $0.75, down 63.41% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $3.65 billion, down 31.67% from the prior-year quarter.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.82 per share and revenue of $18.60 billion. These totals would mark changes of -25.77% and -11.77%, respectively, from last year.
It is also important to note the recent changes to analyst estimates for MCD. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 6.93% higher within the past month. MCD is holding a Zacks Rank of #3 (Hold) right now.
In terms of valuation, MCD is currently trading at a Forward P/E ratio of 32.98. For comparison, its industry has an average Forward P/E of 42.24, which means MCD is trading at a discount to the group.
We can also see that MCD currently has a PEG ratio of 4.49. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Restaurants industry currently had an average PEG ratio of 4.96 as of yesterday's close.
The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 53, which puts it in the top 21% of all 250+ industries.
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
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