Why the Market Dipped But McDonald's (MCD) Gained Today
McDonald's (MCD) ended the recent trading session at $300.47, demonstrating a +0.07% swing from the preceding day's closing price. The stock outperformed the S&P 500, which registered a daily loss of 0.19%. Meanwhile, the Dow experienced a drop of 0.7%, and the technology-dominated Nasdaq saw an increase of 0.04%.
Prior to today's trading, shares of the world's biggest hamburger chain had gained 3.67% over the past month. This has lagged the Retail-Wholesale sector's gain of 6.04% and outpaced the S&P 500's gain of 1.95% in that time.
The upcoming earnings release of McDonald's will be of great interest to investors. The company is expected to report EPS of $3.15, down 1.25% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.76 billion, up 1.04% from the prior-year quarter.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $11.69 per share and revenue of $26.04 billion. These totals would mark changes of -2.09% and +2.15%, respectively, from last year.
Investors should also take note of any recent adjustments to analyst estimates for McDonald's. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.17% higher within the past month. At present, McDonald's boasts a Zacks Rank of #4 (Sell).
From a valuation perspective, McDonald's is currently exchanging hands at a Forward P/E ratio of 25.7. This expresses a premium compared to the average Forward P/E of 20.99 of its industry.
Investors should also note that MCD has a PEG ratio of 4.01 right now. 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 average PEG ratio for the Retail - Restaurants industry stood at 2.23 at the close of the market yesterday.
The Retail - Restaurants industry is part of the Retail-Wholesale sector. At present, this industry carries a Zacks Industry Rank of 167, placing it within the bottom 34% of over 250 industries.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.
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