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McDonald's (MCD) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 min read

McDonald's (MCD) closed the most recent trading day at $242.77, moving +0.21% from the previous trading session. This move lagged the S&P 500's daily gain of 0.74%.

Heading into today, shares of the world's biggest hamburger chain had gained 1.33% over the past month, outpacing the Retail-Wholesale sector's loss of 0.78% and lagging the S&P 500's gain of 1.34% in that time.

Investors will be hoping for strength from MCD as it approaches its next earnings release, which is expected to be October 27, 2021. The company is expected to report EPS of $2.46, up 10.81% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.02 billion, up 11.18% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.03 per share and revenue of $22.95 billion. These totals would mark changes of +49.26% and +19.47%, respectively, from last year.

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Investors should also note any recent changes to analyst estimates for MCD. These recent revisions tend to reflect the evolving nature of short-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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.01% lower within the past month. MCD is currently a Zacks Rank #3 (Hold).

Investors should also note MCD's current valuation metrics, including its Forward P/E ratio of 26.84. This represents a premium compared to its industry's average Forward P/E of 21.57.

Also, we should mention that MCD has a PEG ratio of 2.29. 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 2.34 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 188, which puts it in the bottom 26% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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