U.S. Markets closed

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

Zacks Equity Research
ZUMZ vs. SFIX: Which Stock Is the Better Value Option?

McDonald's (MCD) closed the most recent trading day at $189.22, moving -0.45% from the previous trading session. This change lagged the S&P 500's daily gain of 0.35%. Meanwhile, the Dow gained 0.03%, and the Nasdaq, a tech-heavy index, added 0.7%.

Prior to today's trading, shares of the world's biggest hamburger chain had gained 4.54% over the past month. This has lagged the Retail-Wholesale sector's gain of 6.1% and the S&P 500's gain of 5.14% in that time.

Wall Street will be looking for positivity from MCD as it approaches its next earnings report date. This is expected to be April 30, 2019. The company is expected to report EPS of $1.75, down 2.23% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $4.95 billion, down 3.63% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.12 per share and revenue of $20.91 billion. These totals would mark changes of +2.78% and -0.55%, respectively, from last year.

Any recent changes to analyst estimates for MCD should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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 has moved 0.36% lower within the past month. MCD currently has a Zacks Rank of #4 (Sell).

Digging into valuation, MCD currently has a Forward P/E ratio of 23.41. Its industry sports an average Forward P/E of 21.84, so we one might conclude that MCD is trading at a premium comparatively.

Meanwhile, MCD's PEG ratio is currently 2.66. 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 2.05 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 150, which puts it in the bottom 42% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
McDonald's Corporation (MCD) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research