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

Zacks Equity Research

In the latest trading session, McDonald's (MCD) closed at $218.07, marking a +0.93% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.66%. Meanwhile, the Dow gained 1%, and the Nasdaq, a tech-heavy index, added 0.38%.

Prior to today's trading, shares of the world's biggest hamburger chain had gained 1.75% over the past month. This has outpaced the Retail-Wholesale sector's loss of 4.56% and the S&P 500's loss of 5.01% in that time.

MCD will be looking to display strength as it nears its next earnings release. In that report, analysts expect MCD to post earnings of $2.22 per share. This would mark year-over-year growth of 5.71%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.49 billion, up 2.31% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.01 per share and revenue of $21.12 billion. These totals would mark changes of +1.39% and +0.47%, respectively, from last year.

Any recent changes to analyst estimates for MCD should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. MCD is currently a Zacks Rank #3 (Hold).

In terms of valuation, MCD is currently trading at a Forward P/E ratio of 26.99. This represents a premium compared to its industry's average Forward P/E of 22.94.

It is also worth noting that MCD currently has a PEG ratio of 3.21. 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. MCD's industry had an average PEG ratio of 2.37 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 156, putting it in the bottom 40% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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