McDonald's (MCD) Gains As Market Dips: What You Should Know
McDonald's (MCD) closed the most recent trading day at $251.46, moving +1.19% from the previous trading session. This change outpaced the S&P 500's 0.97% loss on the day. Elsewhere, the Dow lost 0.42%, while the tech-heavy Nasdaq lost 0.49%.
Prior to today's trading, shares of the world's biggest hamburger chain had gained 11.55% over the past month. This has outpaced the Retail-Wholesale sector's gain of 5.34% and the S&P 500's gain of 4.71% in that time.
Investors will be hoping for strength from McDonald's as it approaches its next earnings release, which is expected to be April 28, 2022. The company is expected to report EPS of $2.20, up 14.58% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $5.58 billion, up 8.93% from the prior-year quarter.
For the full year, our Zacks Consensus Estimates are projecting earnings of $9.98 per share and revenue of $24.12 billion, which would represent changes of +7.54% and +3.87%, respectively, from the prior year.
Investors might also notice recent changes to analyst estimates for McDonald's. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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 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 1.96% lower. McDonald's is holding a Zacks Rank of #4 (Sell) right now.
Valuation is also important, so investors should note that McDonald's has a Forward P/E ratio of 24.9 right now. Its industry sports an average Forward P/E of 21.25, so we one might conclude that McDonald's is trading at a premium comparatively.
Meanwhile, MCD's PEG ratio is currently 2.71. 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 industry currently had an average PEG ratio of 2.12 as of yesterday's close.
The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 164, putting it in the bottom 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.
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