McDonald’s (MCD) stock closed at $259.75 today, up 0.33% compared to the previous day. This performance outpaced the S&P 500’s gain of 0.11%, while the Dow dropped 0.3% and the tech-heavy Nasdaq rose 0.56%.
Despite the positive day, McDonald’s stock has struggled in recent weeks, losing 4.23% over the past month. This underperformance lags the Retail-Wholesale sector’s 3.26% gain and the S&P 500’s 5.06% rise during the same period.
Investors will be closely watching McDonald’s upcoming earnings release. Analysts are expecting the company to report earnings per share (EPS) of $3.10, a 2.21% decline from the prior year. Revenue is forecast to reach $6.69 billion, representing a 2.89% increase compared to the same quarter last year.
For the full year, analysts are predicting EPS of $12.17 and revenue of $26.62 billion, representing growth of 1.93% and 4.41% respectively compared to the previous year.
Analysts’ recent adjustments to their estimates for McDonald’s are a key indicator of the company’s near-term performance.
Positive revisions often signal strong confidence in the company’s business and its potential for profits.
Zacks Investment Research uses these revisions to create its Zacks Rank, a quantitative model that assigns a rating based on estimated changes. The Zacks Rank, ranging from #1 (Strong Buy) to #5 (Strong Sell), has a strong track record of success, with #1-rated stocks averaging an annual return of 25% since 1988.
McDonald’s currently holds a Zacks Rank of #3 (Hold). Recent analyst adjustments have slightly lowered the consensus EPS estimate by 0.2%.
Investors should also consider McDonald’s valuation metrics, including its forward P/E ratio of 21.27. This indicates that McDonald’s is trading at a premium compared to the average forward P/E of 18.95 for the industry.
The company’s PEG ratio of 2.92 also reflects its valuation relative to its expected earnings growth. The Retail – Restaurants industry averages a PEG ratio of 1.75.
The Retail – Restaurants industry is part of the Retail-Wholesale sector, which currently ranks 163 out of over 250 industries based on Zacks Industry Rank. This ranking places the industry in the bottom 36% of all industries.
The Zacks Industry Rank analyzes the performance of specific industry groups by averaging the Zacks Rank of individual companies within those groups. Historically, the top 50% of ranked industries have outperformed the bottom 50% by a factor of 2 to 1.