McDonald’s (MCD) closed at $235.19 last trading session, marking a -1.55% move from the previous day. This change was narrower than the S&P 500’s 3.25% loss on the day. Elsewhere, the Dow Jones lost 2.42%, while the tech-heavy Nasdaq lost 0.49%.
Going into today, shares of the world’s largest burger chain had gained 3.4% in the past month, outpacing the retail and wholesale sector’s 4.53% loss and the 5.62% loss of the S&P 500 during this period.
Wall Street will be looking for positivity from McDonald’s as it nears its next earnings release date. In this report, analysts expect McDonald’s to post earnings of $2.46 per share. This would represent an annual growth of 3.8%. Meanwhile, Zacks’ consensus estimate for revenue calls for net sales of $5.85 billion, down 0.63% from the year-ago period.
Zacks consensus estimates for MCD’s full year call for earnings of $9.78 per share and revenue of $23.45 billion. These results would represent year-over-year variations of +5.39% and +0.98%, respectively.
Investors should also note any recent changes to analyst estimates for McDonald’s. These recent revisions tend to reflect the evolving nature of short-term trading trends. With this in mind, we can view positive estimate revisions as a sign of optimism about the company’s business outlook.
Based on our research, we believe that these estimate revisions are directly related to the team’s close stock movements. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes into account these estimation changes and provides a clear and actionable scoring model.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive externally audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past 30 days, our consensus EPS projection was down 0.21%. McDonald’s is currently a Zacks Rank #3 (Hold).
Digging into the valuation, McDonald’s currently has a Forward P/E ratio of 24.43. Its industry sports an average Forward P/E of 17.65, so we can conclude that McDonald’s is trading at a premium comparatively.
Additionally, it is worth mentioning that MCD has a PEG ratio of 3.05. This measure is used in the same way as the famous P/E ratio, but the PEG ratio also takes into account the growth rate of the stock’s expected earnings. The retail-restaurant industry currently had an average PEG ratio of 1.74 as of yesterday’s close.
The Retail – Foodservice industry is part of the Retail – Wholesale sector. This group has a Zacks Industry Rank of 208, which places it in the bottom 18% of all 250+ industries.
The Zacks Industry Rankings are ranked from best to worst in terms of the average Zacks Ranking of individual companies in each of these industries. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.
Be sure to use Zacks.com to track all of these stock movement metrics, and more, in future trading sessions.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.