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

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McDonald's (MCD - Free Report) closed the most recent trading day at $240.26, moving +1.75% from the previous trading session. This move outpaced the S&P 500's daily gain of 1.43%. Meanwhile, the Dow gained 1.02%, and the Nasdaq, a tech-heavy index, added 0.32%.

Prior to today's trading, shares of the world's biggest hamburger chain had lost 4.71% over the past month. This has lagged the Retail-Wholesale sector's gain of 6.49% and the S&P 500's gain of 5.65% in that time.

Investors will be hoping for strength from McDonald's as it approaches its next earnings release. On that day, McDonald's is projected to report earnings of $2.22 per share, which would represent year-over-year growth of 15.63%. Meanwhile, our latest consensus estimate is calling for revenue of $5.63 billion, up 9.84% from the prior-year quarter.

MCD's full-year Zacks Consensus Estimates are calling for earnings of $10.06 per share and revenue of $24.38 billion. These results would represent year-over-year changes of +8.41% and +4.97%, respectively.

It is also important to note the recent changes to analyst estimates for McDonald's. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 1.28% lower within the past month. McDonald's is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, McDonald's is holding a Forward P/E ratio of 23.47. This valuation marks a premium compared to its industry's average Forward P/E of 21.1.

Meanwhile, MCD's PEG ratio is currently 2.55. 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. MCD's industry had an average PEG ratio of 2.04 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 149, putting it in the bottom 42% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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