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

Zacks Equity Research

McDonald's (MCD) closed at $187.41 in the latest trading session, marking a +0.59% move from the prior day. This change outpaced the S&P 500's 0.38% gain on the day. Meanwhile, the Dow gained 0.36%, and the Nasdaq, a tech-heavy index, added 0.66%.

Investors will be hoping for strength from MCD as it approaches its next earnings release. On that day, MCD is projected to report earnings of $0.65 per share, which would represent a year-over-year decline of 68.29%. Meanwhile, our latest consensus estimate is calling for revenue of $3.25 billion, down 39.07% from the prior-year quarter.

MCD's full-year Zacks Consensus Estimates are calling for earnings of $5.50 per share and revenue of $17.52 billion. These results would represent year-over-year changes of -29.85% and -16.87%, respectively.

It is also important to note the recent changes to analyst estimates for MCD. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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 7.07% lower. MCD currently has a Zacks Rank of #3 (Hold).

Digging into valuation, MCD currently has a Forward P/E ratio of 33.89. This represents a discount compared to its industry's average Forward P/E of 38.47.

Meanwhile, MCD's PEG ratio is currently 4.62. 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 4.54 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 121, which puts it in the top 48% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow MCD in the coming trading sessions, be sure to utilize Zacks.com.

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