In the latest trading session, McDonald's (MCD) closed at $301.14, marking a -1.26% move from the previous day. This change lagged the S&P 500's daily gain of 0.48%. Elsewhere, the Dow gained 0.27%, while the tech-heavy Nasdaq added 0.94%.
Heading into today, shares of the world's biggest hamburger chain had lost 2.59% over the past month, lagging the Retail-Wholesale sector's gain of 3.02% and the S&P 500's gain of 2.46%.
The investment community will be closely monitoring the performance of McDonald's in its forthcoming earnings report. It is anticipated that the company will report an EPS of $3.4, marking a 5.26% rise compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $7.07 billion, showing a 2.81% escalation compared to the year-ago quarter.
For the full year, the Zacks Consensus Estimates project earnings of $12.36 per share and a revenue of $26.68 billion, demonstrating changes of +5.46% and +2.94%, respectively, from the preceding year.
Investors should also take note of any recent adjustments to analyst estimates for McDonald's. These revisions typically reflect the latest short-term business trends, which can change frequently. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, there's been a 0.11% rise in the Zacks Consensus EPS estimate. Currently, McDonald's is carrying a Zacks Rank of #3 (Hold).
From a valuation perspective, McDonald's is currently exchanging hands at a Forward P/E ratio of 24.68. Its industry sports an average Forward P/E of 22, so one might conclude that McDonald's is trading at a premium comparatively.
One should further note that MCD currently holds a PEG ratio of 3.11. 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. As the market closed yesterday, the Retail - Restaurants industry was having an average PEG ratio of 2.31.
The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 177, which puts it in the bottom 29% 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.
You can find more information on all of these metrics, and much more, on Zacks.com.
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McDonald's Corporation (MCD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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