McDonald's (MCD) Gains As Market Dips: What You Should Know
McDonald's (MCD) closed the most recent trading day at $243.06, moving +1.45% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.13%. At the same time, the Dow lost 0.15%, and the tech-heavy Nasdaq gained 0.14%.
Coming into today, shares of the world's biggest hamburger chain had lost 2.02% in the past month. In that same time, the Retail-Wholesale sector gained 2.55%, while the S&P 500 lost 3.32%.
Wall Street will be looking for positivity from McDonald's as it approaches its next earnings report date. The company is expected to report EPS of $2.46, up 3.8% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $5.85 billion, down 0.63% from the prior-year quarter.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.78 per share and revenue of $23.45 billion. These totals would mark changes of +5.39% and +0.98%, respectively, from last year.
Any recent changes to analyst estimates for McDonald's should also be noted by investors. Recent revisions tend to reflect the latest 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. 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. The Zacks Consensus EPS estimate has moved 0.21% lower within the past month. McDonald's is holding a Zacks Rank of #3 (Hold) right now.
Valuation is also important, so investors should note that McDonald's has a Forward P/E ratio of 24.5 right now. Its industry sports an average Forward P/E of 17.28, so we one might conclude that McDonald's is trading at a premium comparatively.
It is also worth noting that MCD currently has a PEG ratio of 3.06. 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. Retail - Restaurants stocks are, on average, holding a PEG ratio of 1.73 based on yesterday's closing prices.
The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 184, putting it in the bottom 28% 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.
Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.
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