McDonald’s (MCD) closed the most recent trading day at $242.96, moving +1.8% from the previous trading session. This move outpaced the S&P 500’s daily gain of 1.02%.
Prior to today’s trading, shares of the world’s biggest hamburger chain had gained 2.29% over the past month. This has outpaced the Retail-Wholesale sector’s gain of 0.19% and lagged the S&P 500’s gain of 3.01% in that time.
MCD will be looking to display strength as it nears its next earnings release, which is expected to be July 28, 2021. In that report, analysts expect MCD to post earnings of $2.12 per share. This would mark year-over-year growth of 221.21%. Our most recent consensus estimate is calling for quarterly revenue of $5.57 billion, up 48.15% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.61 per share and revenue of $22.46 billion. These totals would mark changes of +42.31% and +16.92%, respectively, from last year.
Investors should also note any recent changes to analyst estimates for MCD. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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. The Zacks Consensus EPS estimate has moved 0.3% higher within the past month. MCD is currently sporting a Zacks Rank of #3 (Hold).
Digging into valuation, MCD currently has a Forward P/E ratio of 27.73. This valuation marks a premium compared to its industry’s average Forward P/E of 27.5.
It is also worth noting that MCD currently has a PEG ratio of 3.2. 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 industry currently had an average PEG ratio of 3.24 as of yesterday’s close.
The Retail – Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 90, putting it in the top 36% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.