McDonald’s (MCD – Free Report) closed at $306.92 in the latest trading session, marking a +1.09% move from the prior day. The stock’s change was more than the S&P 500’s daily gain of 1.08%. Elsewhere, the Dow saw an upswing of 0.92%, while the tech-heavy Nasdaq appreciated by 1.41%.
Heading into today, shares of the world’s biggest hamburger chain had lost 0.4% over the past month, outpacing the Retail-Wholesale sector’s loss of 11.45% and the S&P 500’s loss of 8.26% in that time.
The upcoming earnings release of McDonald’s will be of great interest to investors. In that report, analysts expect McDonald’s to post earnings of $2.68 per share. This would mark a year-over-year decline of 0.74%. Meanwhile, our latest consensus estimate is calling for revenue of $6.13 billion, down 0.55% from the prior-year quarter.
For the full year, the Zacks Consensus Estimates are projecting earnings of $12.23 per share and revenue of $26.37 billion, which would represent changes of +4.35% and +1.74%, respectively, from the prior year.
Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for McDonald’s. These recent revisions tend to reflect the evolving nature of short-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.
The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.23% lower. As of now, McDonald’s holds a Zacks Rank of #3 (Hold).
In terms of valuation, McDonald’s is currently trading at a Forward P/E ratio of 24.83. This expresses a premium compared to the average Forward P/E of 23.14 of its industry.
We can also see that MCD currently has a PEG ratio of 3.11. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company’s anticipated earnings growth rate. As the market closed yesterday, the Retail – Restaurants industry was having an average PEG ratio of 2.08.
The Retail – Restaurants industry is part of the Retail-Wholesale sector. At present, this industry carries a Zacks Industry Rank of 142, placing it within the bottom 44% of over 250 industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming 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.
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