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

·3 min read

McDonald's (MCD) closed at $255.72 in the latest trading session, marking a +0.55% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.34%. Meanwhile, the Dow gained 0.1%, and the Nasdaq, a tech-heavy index, added 0.02%.

Heading into today, shares of the world's biggest hamburger chain had lost 4.49% over the past month, outpacing the Retail-Wholesale sector's loss of 6.76% and the S&P 500's loss of 7.95% in that time.

McDonald's will be looking to display strength as it nears its next earnings release. On that day, McDonald's is projected to report earnings of $2.59 per share, which would represent a year-over-year decline of 6.16%. Our most recent consensus estimate is calling for quarterly revenue of $5.77 billion, down 6.98% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.83 per share and revenue of $22.76 billion, which would represent changes of +5.93% and -1.99%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for McDonald's. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. The Zacks Consensus EPS estimate has moved 0.02% higher within the past month. McDonald's is currently a Zacks Rank #3 (Hold).

Investors should also note McDonald's's current valuation metrics, including its Forward P/E ratio of 25.88. This represents a premium compared to its industry's average Forward P/E of 19.75.

Investors should also note that MCD has a PEG ratio of 3.09 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MCD's industry had an average PEG ratio of 2.1 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 162, putting it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

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

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