Back to top

Image: Bigstock

McDonald's (MCD) Advances While Market Declines: Some Information for Investors

Read MoreHide Full Article

The most recent trading session ended with McDonald's (MCD - Free Report) standing at $294.82, reflecting a +0.78% shift from the previouse trading day's closing. The stock outpaced the S&P 500's daily loss of 0.11%. Elsewhere, the Dow gained 0.12%, while the tech-heavy Nasdaq lost 0.41%.

Coming into today, shares of the world's biggest hamburger chain had gained 1.06% in the past month. In that same time, the Retail-Wholesale sector gained 2.97%, while the S&P 500 gained 2.7%.

The investment community will be paying close attention to the earnings performance of McDonald's in its upcoming release. On that day, McDonald's is projected to report earnings of $2.72 per share, which would represent year-over-year growth of 3.42%. Meanwhile, the latest consensus estimate predicts the revenue to be $6.18 billion, indicating a 4.86% increase compared to the same quarter of the previous year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $12.38 per share and revenue of $26.96 billion, which would represent changes of +3.69% and +5.75%, respectively, from the prior year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for McDonald's. Such recent modifications usually signify the changing landscape of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional 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 0.04% higher. McDonald's currently has a Zacks Rank of #3 (Hold).

Investors should also note McDonald's's current valuation metrics, including its Forward P/E ratio of 23.63. This indicates a premium in contrast to its industry's Forward P/E of 20.88.

It's also important to note that MCD currently trades at a PEG ratio of 3.16. 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 had an average PEG ratio of 1.97 as trading concluded yesterday.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 89, which puts it in the top 36% 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.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.


See More Zacks Research for These Tickers


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


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

Published in