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

In the latest close session, McDonald's (MCD) was up +1.96% at $257.49. The stock exceeded the S&P 500, which registered a loss of 0.48% for the day. On the other hand, the Dow registered a loss of 0.29%, and the technology-centric Nasdaq decreased by 0.56%.

The stock of world's biggest hamburger chain has fallen by 7.44% in the past month, lagging the Retail-Wholesale sector's loss of 7.24% and the S&P 500's loss of 0.82%.

Analysts and investors alike will be keeping a close eye on the performance of McDonald's in its upcoming earnings disclosure. The company is expected to report EPS of $3.39, up 5.28% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $7.28 billion, up 2.88% from the prior-year quarter.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $12.88 per share and a revenue of $28.17 billion, indicating changes of +5.57% and +4.78%, respectively, from the former year.

Investors should also pay attention to any latest changes in analyst estimates for McDonald's. Such recent modifications usually signify the changing landscape of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.09% lower. McDonald's is currently a Zacks Rank #3 (Hold).

In terms of valuation, McDonald's is currently trading at a Forward P/E ratio of 19.61. This denotes a discount relative to the industry average Forward P/E of 21.53.

It is also worth noting that MCD currently has a PEG ratio of 2.72. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. MCD's industry had an average PEG ratio of 1.77 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. With its current Zacks Industry Rank of 104, this industry ranks in the top 43% of all industries, numbering over 250.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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