In the latest trading session, McDonald’s (MCD – Free Report) closed at $305.44, marking a -0.51% move from the previous day. The stock fell short of the S&P 500, which registered a gain of 0.08% for the day. Elsewhere, the Dow gained 0.08%, while the tech-heavy Nasdaq added 0.52%.
The world’s biggest hamburger chain’s stock has climbed by 1.3% in the past month, exceeding the Retail-Wholesale sector’s loss of 9.1% and the S&P 500’s loss of 7.33%.
Analysts and investors alike will be keeping a close eye on the performance of McDonald’s in its upcoming earnings disclosure. On that day, McDonald’s is projected to report earnings of $2.68 per share, which would represent a year-over-year decline of 0.74%. Simultaneously, our latest consensus estimate expects the revenue to be $6.13 billion, showing a 0.55% drop compared to the year-ago quarter.
For the full year, the Zacks Consensus Estimates project earnings of $12.23 per share and a revenue of $26.37 billion, demonstrating changes of +4.35% and +1.74%, respectively, from the preceding year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for McDonald’s. These recent revisions tend to reflect the evolving nature of short-term business trends. Therefore, positive revisions in estimates convey analysts’ confidence in the company’s business performance and profit potential.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.23% decrease. Right now, McDonald’s possesses a Zacks Rank of #3 (Hold).
Digging into valuation, McDonald’s currently has a Forward P/E ratio of 25.11. For comparison, its industry has an average Forward P/E of 23.19, which means McDonald’s is trading at a premium to the group.
One should further note that MCD currently holds a PEG ratio of 3.15. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company’s projected earnings growth. As of the close of trade yesterday, the Retail – Restaurants industry held an average PEG ratio of 2.12.
The Retail – Restaurants industry is part of the Retail-Wholesale sector. With its current Zacks Industry Rank of 140, this industry ranks in the bottom 45% of all industries, numbering over 250.
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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