McDonald’s (MCD) closed recently at $259.54, marking a 0.88% increase from the previous day. However, this performance lagged behind the broader market. The S&P 500 rose by 1.08%, the Dow Jones Industrial Average increased by 0.32%, and the Nasdaq Composite surged by 1.58%.
Over the past month, McDonald’s stock has fallen by 0.81%. This decline is greater than the Retail-Wholesale sector’s drop of 0.31% and less favorable compared to the S&P 500’s gain of 0.43%.
Investors are keenly awaiting McDonald’s upcoming earnings report, scheduled for July 29, 2024. Analysts forecast earnings per share (EPS) of $3.08, which represents a 2.84% decrease from the same quarter last year. Revenue is expected to reach $6.66 billion, reflecting a 2.55% increase year-over-year.
For the full year, the Zacks Consensus Estimates project earnings of $12.13 per share and revenue of $26.58 billion, marking increases of 1.59% and 4.24%, respectively, from the previous year.
Investors should also monitor recent changes in analyst estimates for McDonald’s. These revisions offer insights into shifting business trends and analysts’ expectations of the company’s profitability. Upward revisions generally indicate positive sentiment about the company’s future performance.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), provides a practical rating based on these estimates. Historically, #1-rated stocks have delivered an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate for McDonald’s has decreased by 0.49%, and the stock currently holds a Zacks Rank of #3 (Hold).
In terms of valuation, McDonald’s is trading with a Forward P/E ratio of 21.22, which is higher than the industry average of 19.49. Additionally, McDonald’s PEG ratio stands at 2.96. While similar to the P/E ratio, the PEG ratio accounts for the company’s expected earnings growth. The average PEG ratio for the Retail – Restaurants industry is 1.91.
The Retail – Restaurants industry is part of the Retail-Wholesale sector, which has a Zacks Industry Rank of 157, placing it in the bottom 38% of over 250 industries. The Zacks Industry Rank measures the strength of industry groups based on the average Zacks Rank of their constituent stocks. Typically, the top 50% of rated industries outperform the bottom half by a factor of 2 to 1.