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McDonald's (MCD) Gains But Lags Market: What You Should Know

In the latest trading session, McDonald's (MCD) closed at $207.37, marking a +1.24% move from the previous day. This move lagged the S&P 500's daily gain of 1.95%. Elsewhere, the Dow gained 1.85%, while the tech-heavy Nasdaq added 1.55%.

Prior to today's trading, shares of the world's biggest hamburger chain had lost 2.93% over the past month. This has was narrower than the Retail-Wholesale sector's loss of 9% and lagged the S&P 500's loss of 2.45% in that time.

MCD will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.77, up 20.41% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.99 billion, up 5.8% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.36 per share and revenue of $22 billion, which would represent changes of +38.18% and +14.52%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MCD. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.13% lower. MCD currently has a Zacks Rank of #3 (Hold).

In terms of valuation, MCD is currently trading at a Forward P/E ratio of 24.5. Its industry sports an average Forward P/E of 38.4, so we one might conclude that MCD is trading at a discount comparatively.

Meanwhile, MCD's PEG ratio is currently 2.83. 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. The Retail - Restaurants industry currently had an average PEG ratio of 3.13 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 226, which puts it in the bottom 12% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

To follow MCD in the coming trading sessions, be sure to utilize Zacks.com.


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