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McDonald's (MCD) Laps the Stock Market: Here's Why

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McDonald's (MCD - Free Report) closed the latest trading day at $257.27, indicating a +0.99% change from the previous session's end. The stock exceeded the S&P 500, which registered a gain of 0.73% for the day. At the same time, the Dow added 0.62%, and the tech-heavy Nasdaq gained 0.93%.

Prior to today's trading, shares of the world's biggest hamburger chain had lost 5.57% over the past month. This has lagged the Retail-Wholesale sector's loss of 3.41% and the S&P 500's loss of 2.29% in that time.

The upcoming earnings release of McDonald's will be of great interest to investors. The company's earnings report is expected on October 30, 2023. On that day, McDonald's is projected to report earnings of $3 per share, which would represent year-over-year growth of 11.94%. Meanwhile, our latest consensus estimate is calling for revenue of $6.57 billion, up 11.81% from the prior-year quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $11.52 per share and revenue of $25.43 billion, indicating changes of +14.06% and +9.68%, respectively, compared to the previous year.

Investors might also notice recent changes to analyst estimates for McDonald's. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed an unchanged state. At present, McDonald's boasts a Zacks Rank of #3 (Hold).

In terms of valuation, McDonald's is presently being traded at a Forward P/E ratio of 22.12. This signifies a premium in comparison to the average Forward P/E of 19.31 for its industry.

Meanwhile, MCD's PEG ratio is currently 2.38. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. Retail - Restaurants stocks are, on average, holding a PEG ratio of 1.61 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry, currently bearing a Zacks Industry Rank of 80, finds itself in the top 32% echelons 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.

Ensure to harness to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

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