Back to top

Image: Bigstock

McDonald's (MCD) Gains As Market Dips: What You Should Know

Read MoreHide Full Article

In the latest trading session, McDonald's (MCD - Free Report) closed at $262.34, marking a +1.06% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.72%.

Prior to today's trading, shares of the world's biggest hamburger chain had gained 2.55% over the past month. This has outpaced the Retail-Wholesale sector's loss of 2.61% and the S&P 500's gain of 0.11% in that time.

McDonald's will be looking to display strength as it nears its next earnings release. On that day, McDonald's is projected to report earnings of $2.32 per share, which would represent year-over-year growth of 36.47%. Our most recent consensus estimate is calling for quarterly revenue of $6.03 billion, up 13.47% from the year-ago period.

MCD's full-year Zacks Consensus Estimates are calling for earnings of $9.37 per share and revenue of $23.22 billion. These results would represent year-over-year changes of +54.88% and +20.9%, respectively.

Any recent changes to analyst estimates for McDonald's should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.38% higher. McDonald's is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note McDonald's's current valuation metrics, including its Forward P/E ratio of 27.7. This represents a premium compared to its industry's average Forward P/E of 23.88.

We can also see that MCD currently has a PEG ratio of 2.42. 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 1.98 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 236, which puts it in the bottom 8% 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.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


McDonald's Corporation (MCD) - free report >>

Published in