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

Zacks Equity Research

In the latest trading session, McDonald's (MCD) closed at $212.69, marking a -0.15% move from the previous day. This move lagged the S&P 500's daily gain of 0.23%. At the same time, the Dow added 0.85%, and the tech-heavy Nasdaq lost 0.08%.

Heading into today, shares of the world's biggest hamburger chain had gained 3.94% over the past month, lagging the Retail-Wholesale sector's gain of 5.22% and outpacing the S&P 500's gain of 3.84% 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 July 26, 2019. On that day, MCD is projected to report earnings of $2.06 per share, which would represent year-over-year growth of 3.52%. Our most recent consensus estimate is calling for quarterly revenue of $5.32 billion, down 0.62% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.02 per share and revenue of $21.03 billion, which would represent changes of +1.52% and +0.02%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for MCD. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 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. Within the past 30 days, our consensus EPS projection has moved 0.32% higher. MCD is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, MCD currently has a Forward P/E ratio of 26.56. Its industry sports an average Forward P/E of 23.89, so we one might conclude that MCD is trading at a premium comparatively.

Meanwhile, MCD's PEG ratio is currently 3.06. 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. MCD's industry had an average PEG ratio of 2.12 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 97, which puts it in the top 38% 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.

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


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