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McDonald's (MCD) Gains But Lags Market: What You Should Know

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McDonald's (MCD - Free Report) closed at $289.31 in the latest trading session, marking a +0.11% move from the prior day. The stock lagged the S&P 500's daily gain of 0.33%. Elsewhere, the Dow gained 0.3%, while the tech-heavy Nasdaq added 1.92%.

Coming into today, shares of the world's biggest hamburger chain had gained 8.15% in the past month. In that same time, the Retail-Wholesale sector gained 4.83%, while the S&P 500 gained 5.67%.

McDonald's will be looking to display strength as it nears its next earnings release, which is expected to be April 25, 2023. The company is expected to report EPS of $2.29, up 0.44% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $5.55 billion, down 2.07% from the year-ago period.

MCD's full-year Zacks Consensus Estimates are calling for earnings of $10.51 per share and revenue of $24.29 billion. These results would represent year-over-year changes of +4.06% and +4.78%, respectively.

Investors should also note any recent changes to analyst estimates for McDonald's. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.01% lower within the past month. McDonald's is currently a Zacks Rank #3 (Hold).

Looking at its valuation, McDonald's is holding a Forward P/E ratio of 27.5. Its industry sports an average Forward P/E of 24.23, so we one might conclude that McDonald's is trading at a premium comparatively.

It is also worth noting that MCD currently has a PEG ratio of 3.41. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Retail - Restaurants stocks are, on average, holding a PEG ratio of 1.97 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 44, which puts it in the top 18% 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.

To follow MCD in the coming trading sessions, be sure to utilize Zacks.com.


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