McDonald's (MCD) closed at $162.98 in the latest trading session, marking a +0.64% move from the prior day. The stock lagged the S&P 500's daily gain of 1.15%. Meanwhile, the Dow gained 2.39%, and the Nasdaq, a tech-heavy index, lost 0.45%.
Coming into today, shares of the world's biggest hamburger chain had lost 23.65% in the past month. In that same time, the Retail-Wholesale sector lost 15.08%, while the S&P 500 lost 24.07%.
MCD will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.87, up 8.72% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.11 billion, up 3.17% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.27 per share and revenue of $21.61 billion. These totals would mark changes of +5.48% and +2.53%, respectively, from last year.
It is also important to note the recent changes to analyst estimates for MCD. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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.
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 3.15% lower. MCD is holding a Zacks Rank of #3 (Hold) right now.
Investors should also note MCD's current valuation metrics, including its Forward P/E ratio of 19.58. This valuation marks a premium compared to its industry's average Forward P/E of 12.47.
Also, we should mention that MCD has a PEG ratio of 2.36. 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 was holding an average PEG ratio of 1.66 at yesterday's closing price.
The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 142, putting it in the bottom 45% 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.
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