Back to top

Image: Bigstock

McDonald's (MCD) Stock Sinks As Market Gains: What You Should Know

Read MoreHide Full Article

In the latest trading session, McDonald's (MCD - Free Report) closed at $196.52, marking a -0.69% move from the previous day. This change lagged the S&P 500's 0.03% gain on the day. Elsewhere, the Dow gained 0.11%, while the tech-heavy Nasdaq added 0.1%.

Prior to today's trading, shares of the world's biggest hamburger chain had gained 1.85% over the past month. This has lagged the Retail-Wholesale sector's gain of 2.17% and outpaced the S&P 500's gain of 1.82% in that time.

Investors will be hoping for strength from MCD as it approaches its next earnings release. The company is expected to report EPS of $1.96, down 0.51% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.30 billion, up 2.64% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.84 per share and revenue of $21.03 billion. These totals would mark changes of -0.76% and +0.04%, respectively, from last year.

Investors should also note any 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.09% higher. MCD is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that MCD has a Forward P/E ratio of 25.24 right now. This valuation marks a premium compared to its industry's average Forward P/E of 23.74.

Investors should also note that MCD has a PEG ratio of 3 right now. 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 2.25 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 64, which puts it in the top 26% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


In-Depth Zacks Research for the Tickers Above


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


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

Published in