McDonald's (MCD) Dips More Than Broader Markets: What You Should Know

McDonald's (MCD) closed the most recent trading day at $224.27, moving -1.94% from the previous trading session. This move lagged the S&P 500's daily loss of 1.86%. Elsewhere, the Dow lost 2.3%, while the tech-heavy Nasdaq lost 1.64%.

Heading into today, shares of the world's biggest hamburger chain had gained 5.83% over the past month, lagging the Retail-Wholesale sector's gain of 8.32% and the S&P 500's gain of 7.63% in that time.

Investors will be hoping for strength from MCD as it approaches its next earnings release, which is expected to be November 9, 2020. On that day, MCD is projected to report earnings of $1.92 per share, which would represent a year-over-year decline of 9%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.36 billion, down 1.38% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.99 per share and revenue of $19.27 billion. These totals would mark changes of -23.6% and -8.59%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for MCD. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 2.3% higher. MCD currently has a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that MCD has a Forward P/E ratio of 38.15 right now. For comparison, its industry has an average Forward P/E of 31.82, which means MCD is trading at a premium to the group.

We can also see that MCD currently has a PEG ratio of 5.28. 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 Retail - Restaurants industry currently had an average PEG ratio of 4.33 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 118, which puts it in the top 47% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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