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

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McDonald's (MCD - Free Report) closed at $210.85 in the latest trading session, marking a +0.51% move from the prior day. The stock lagged the S&P 500's daily gain of 0.84%. Elsewhere, the Dow gained 0.92%, while the tech-heavy Nasdaq added 1.06%.

Coming into today, shares of the world's biggest hamburger chain had gained 7.23% in the past month. In that same time, the Retail-Wholesale sector gained 3.8%, while the S&P 500 gained 3.95%.

Investors will be hoping for strength from MCD as it approaches its next earnings release, which is expected to be January 29, 2020. The company is expected to report EPS of $1.96, down 0.51% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $5.30 billion, up 2.68% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for MCD. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Within the past 30 days, our consensus EPS projection has moved 0.06% lower. MCD currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, MCD is holding a Forward P/E ratio of 24.75. This valuation marks a premium compared to its industry's average Forward P/E of 22.27.

Investors should also note that MCD has a PEG ratio of 2.94 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Retail - Restaurants stocks are, on average, holding a PEG ratio of 2 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 91, 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.

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


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