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McDonald's (MCD) Ascends While Market Falls: Some Facts to Note

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McDonald's (MCD - Free Report) ended the recent trading session at $297.01, demonstrating a +1.09% change from the preceding day's closing price. The stock outpaced the S&P 500's daily loss of 2.71%. Elsewhere, the Dow saw a downswing of 1.9%, while the tech-heavy Nasdaq depreciated by 3.56%.

Shares of the world's biggest hamburger chain witnessed a loss of 4.74% over the previous month, trailing the performance of the Retail-Wholesale sector with its loss of 4.01%, and the S&P 500's gain of 3.5%.

The upcoming earnings release of McDonald's will be of great interest to investors. The company is predicted to post an EPS of $3.4, indicating a 5.26% growth compared to the equivalent quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $7.07 billion, indicating a 2.81% growth compared to the corresponding quarter of the prior year.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $12.37 per share and a revenue of $26.69 billion, representing changes of +5.55% and +2.96%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for McDonald's. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. 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, there's been a 0.07% rise in the Zacks Consensus EPS estimate. Right now, McDonald's possesses a Zacks Rank of #3 (Hold).

In the context of valuation, McDonald's is at present trading with a Forward P/E ratio of 23.76. This indicates a premium in contrast to its industry's Forward P/E of 22.25.

One should further note that MCD currently holds a PEG ratio of 3.09. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. As the market closed yesterday, the Retail - Restaurants industry was having an average PEG ratio of 2.22.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. With its current Zacks Industry Rank of 182, this industry ranks in the bottom 27% of all industries, numbering over 250.

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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