McDonald’s (MCD) closed the most recent trading day at $175.59, moving -0.82% from the previous trading session. This change lagged the S&P 500’s daily loss of 0.16%. Meanwhile, the Dow lost 0.12%, and the Nasdaq, a tech-heavy index, lost 0.33%.
Prior to today’s trading, shares of the world’s biggest hamburger chain had lost 5.26% over the past month. This has was narrower than the Retail-Wholesale sector’s loss of 5.75% and the S&P 500’s loss of 10.5% in that time.
Investors will be hoping for strength from MCD as it approaches its next earnings release, which is expected to be April 30, 2020. On that day, MCD is projected to report earnings of $1.70 per share, which would represent a year-over-year decline of 1.16%. Our most recent consensus estimate is calling for quarterly revenue of $4.87 billion, down 1.73% from the year-ago period.
MCD’s full-year Zacks Consensus Estimates are calling for earnings of $7.16 per share and revenue of $19.78 billion. These results would represent year-over-year changes of -8.67% and -6.16%, respectively.
Any recent changes to analyst estimates for MCD should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 16.11% lower. MCD currently has a Zacks Rank of #4 (Sell).
Looking at its valuation, MCD is holding a Forward P/E ratio of 24.72. Its industry sports an average Forward P/E of 20.59, so we one might conclude that MCD is trading at a premium comparatively.
We can also see that MCD currently has a PEG ratio of 2.98. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. The Retail – Restaurants was holding an average PEG ratio of 1.98 at yesterday’s closing price.
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