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McDonald's (MCD) Gains But Lags Market: What You Should Know

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In the latest trading session, McDonald's (MCD - Free Report) closed at $186.37, marking a +0.76% move from the previous day. This change lagged the S&P 500's 1.09% gain on the day. Meanwhile, the Dow gained 0.84%, and the Nasdaq, a tech-heavy index, added 1.42%.

Heading into today, shares of the world's biggest hamburger chain had gained 2.48% over the past month, lagging the Retail-Wholesale sector's gain of 3.02% and outpacing the S&P 500's gain of 1.18% in that time.

Investors will be hoping for strength from MCD as it approaches its next earnings release. In that report, analysts expect MCD to post earnings of $1.78 per share. This would mark a year-over-year decline of 0.56%. Our most recent consensus estimate is calling for quarterly revenue of $4.95 billion, down 3.62% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.14 per share and revenue of $20.95 billion. These totals would mark changes of +3.04% and -0.37%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for MCD. These recent revisions tend to reflect the evolving nature of short-term business trends. 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. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.52% lower. MCD is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that MCD has a Forward P/E ratio of 22.72 right now. This valuation marks a discount compared to its industry's average Forward P/E of 22.77.

We can also see that MCD currently has a PEG ratio of 2.57. 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. MCD's industry had an average PEG ratio of 2 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 162, putting it in the bottom 37% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.



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