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McDonald's (MCD) Outpaces Stock Market Gains: What You Should Know

McDonald's (MCD) closed the most recent trading day at $181.11, moving +0.98% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.76%. Elsewhere, the Dow gained 0.67%, while the tech-heavy Nasdaq added 0.71%.

Prior to today's trading, shares of the world's biggest hamburger chain had gained 0.11% over the past month. This has lagged the Retail-Wholesale sector's gain of 2.28% and the S&P 500's gain of 0.75% in that time.

MCD will be looking to display strength as it nears its nex t earnings release, which is expected to be January 30, 2019. In tha t report , analysts expect MCD to post earnings of $1.89 per share. This would mark year-over-year growth of 10.53%. Meanwhile, our latest consensus estimate is calling for revenue of $5.16 billion, down 3.44% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for MCD. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.05% lower. MCD is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, MCD is holding a Forward P/E ratio of 21.7. Its industry sports an average Forward P/E of 21.28, so we one might conclude that MCD is trading at a premium comparatively.

It is also worth noting that MCD currently has a PEG ratio of 2.47. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Restaurants was holding an average PEG ratio of 1.65 at yesterday's closing price.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 158, which puts it in the bottom 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much 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.


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

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