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McDonald's (MCD) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, McDonald's (MCD) closed at $233.08, marking a +0.78% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.36%.

Heading into today, shares of the world's biggest hamburger chain had gained 2.77% over the past month, outpacing the Retail-Wholesale sector's gain of 0.74% and lagging the S&P 500's gain of 5.21% in that time.

Wall Street will be looking for positivity from MCD as it approaches its next earnings report date. This is expected to be April 29, 2021. The company is expected to report EPS of $1.79, up 21.77% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $5.02 billion, up 6.55% from the year-ago period.

MCD's full-year Zacks Consensus Estimates are calling for earnings of $8.40 per share and revenue of $22.07 billion. These results would represent year-over-year changes of +38.84% and +14.88%, respectively.

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Any recent changes to analyst estimates for MCD should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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. Within the past 30 days, our consensus EPS projection has moved 0.43% higher. MCD is currently a Zacks Rank #3 (Hold).

In terms of valuation, MCD is currently trading at a Forward P/E ratio of 27.41. Its industry sports an average Forward P/E of 40.6, so we one might conclude that MCD is trading at a discount comparatively.

We can also see that MCD currently has a PEG ratio of 3.16. 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. MCD's industry had an average PEG ratio of 3.29 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 107, putting it in the top 43% 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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