Markets

McDonald's (MCD) Gains But Lags Market: What You Should Know

In the latest trading session, McDonald's (MCD) closed at $204.51, marking a +0.34% move from the previous day. This change lagged the S&P 500's 0.97% gain on the day. At the same time, the Dow added 1.35%, and the tech-heavy Nasdaq gained 1.39%.

Prior to today's trading, shares of the world's biggest hamburger chain had gained 2.42% over the past month. This has outpaced the Retail-Wholesale sector's gain of 1.48% and the S&P 500's gain of 0.64% in that time.

MCD will be looking to display strength as it nears its next earnings release. On that day, MCD is projected to report earnings of $2.05 per share, which would represent year-over-year growth of 3.02%. Our most recent consensus estimate is calling for quarterly revenue of $5.30 billion, down 0.92% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.04 per share and revenue of $21 billion, which would represent changes of +1.77% and -0.12%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MCD. These recent revisions tend to reflect the evolving nature of short-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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 0.01% lower within the past month. MCD currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MCD has a Forward P/E ratio of 25.35 right now. This represents a premium compared to its industry's average Forward P/E of 23.13.

Investors should also note that MCD has a PEG ratio of 2.85 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Restaurants industry currently had an average PEG ratio of 2.1 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 100, putting it in the top 40% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.