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McDonald's (MCD) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, McDonald's (MCD - Free Report) closed at $267.21, marking a -0.48% move from the previous day. This change lagged the S&P 500's daily loss of 0.3%. At the same time, the Dow lost 0.25%, and the tech-heavy Nasdaq gained 0.33%.

Heading into today, shares of the world's biggest hamburger chain had gained 9.96% over the past month, outpacing the Retail-Wholesale sector's loss of 2.8% and the S&P 500's gain of 3.11% in that time.

McDonald's will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.32, up 36.47% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.03 billion, up 13.47% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.42 per share and revenue of $23.22 billion. These totals would mark changes of +55.7% and +20.9%, respectively, from last year.

Any recent changes to analyst estimates for McDonald's should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, 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 0.35% higher. McDonald's is holding a Zacks Rank of #2 (Buy) right now.

Digging into valuation, McDonald's currently has a Forward P/E ratio of 28.5. Its industry sports an average Forward P/E of 23.32, so we one might conclude that McDonald's is trading at a premium comparatively.

Meanwhile, MCD's PEG ratio is currently 2.49. 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 2.09 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 222, which puts it in the bottom 13% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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