We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Buy This Blue Chip Stock Now on the Dip and Hold Forever?
Read MoreHide Full Article
McDonald’s (MCD - Free Report) ) stock is down 13% since the start of July heading into its Q3 earnings release on October 30. The fast-food giant is, however, finding support, and investors might want to think about buying McDonald’s stock at its current levels and possibly holding it for years to come considering its impressive fundamentals.
The Bullish Basics
McDonald’s remains a staple around the world, with over 40,000 locations across more than 100 countries. Despite all the talk about a health food craze, McDonald’s posted 11% global comps growth in 2022 and 17% in 2021. On top of that, McDonald’s has been able to slowly tweak its menu and thrive during the digitalization of the restaurant industry.
The McDonald’s app was downloaded 127 million times worldwide in 2022, blowing away Uber Eats’ 60 million, DoorDash’s 42 million, and Starbucks’ (SBUX - Free Report) 34 million. The company could also benefit from raising royalty fees for new franchise restaurants in the U.S. and Canada for the first time in roughly 30 years, with about 95% of McDonald’s locations owned by franchisees.
Image Source: Zacks Investment Research
Other Fundamentals
McDonald’s adjusted earnings are projected to surge 14% in 2023 and another 7% in FY24, based on current Zacks estimates. McDonald’s has topped our bottom line estimates for six quarters running, including a 14% beat in the last two periods. The company’s earnings outlook for FY23 and FY24 is still up big from earlier this year and its EPS outlook for 2025 is improving
McDonald’s is projected to expand its revenue by 10% this year and grow its sales by another 7% next year. On top of that, its overall comparable sales are projected to climb by over 9% in 2023.
Image Source: Zacks Investment Research
McDonald’s stock has crushed the S&P 500 over the last 25 years and outpaced the benchmark over the last decade, up 170% vs. 150%. MCD has also rather handily outperformed Starbucks over the last 10 years.
MCD shares have climbed around 10% during the trailing 24 months vs. the benchmark’s 8% drop, despite its recent correction. McDonald’s shares have fallen roughly 13% from the end of June.
The selling appears to have been spurred, at least in some part, by profit-taking after MCD rallied to new all-time highs. McDonald’s shares are currently trading below their 50-day and 200-day moving average.
Thankfully, MCD found support recently after hitting its most oversold RSI levels since the initial Covid-19 selloff. The stock was also approaching its 200-week moving average before buyers started to step in. Plus, McDonald’s is trading about 24% below its average Zacks price target.
On the valuation side, MCD is trading at an 8% discount to its 10-year median and 30% below its own highs at 21.0X forward 12-month earnings. McDonald’s stock is now trading around its lowest forward earnings multiples during the last five years and nearly in line with the Zacks Retail sector.
Bottom Line
McDonald’s is one of only around 65 S&P 500 Dividend Aristocrats, which are companies that have both paid and raised dividends for at least 25 straight years.
Wall Street remains very high on the stock given its ongoing strength in a key area of the economy, with 75% of the 29 brokerage recommendations Zacks has sitting at “Strong Buys” or “Buy,” with no sells. Wall Street and customers know what to expect from MCD and they will likely keep coming back for more.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Buy This Blue Chip Stock Now on the Dip and Hold Forever?
McDonald’s (MCD - Free Report) ) stock is down 13% since the start of July heading into its Q3 earnings release on October 30. The fast-food giant is, however, finding support, and investors might want to think about buying McDonald’s stock at its current levels and possibly holding it for years to come considering its impressive fundamentals.
The Bullish Basics
McDonald’s remains a staple around the world, with over 40,000 locations across more than 100 countries. Despite all the talk about a health food craze, McDonald’s posted 11% global comps growth in 2022 and 17% in 2021. On top of that, McDonald’s has been able to slowly tweak its menu and thrive during the digitalization of the restaurant industry.
The McDonald’s app was downloaded 127 million times worldwide in 2022, blowing away Uber Eats’ 60 million, DoorDash’s 42 million, and Starbucks’ (SBUX - Free Report) 34 million. The company could also benefit from raising royalty fees for new franchise restaurants in the U.S. and Canada for the first time in roughly 30 years, with about 95% of McDonald’s locations owned by franchisees.
Image Source: Zacks Investment Research
Other Fundamentals
McDonald’s adjusted earnings are projected to surge 14% in 2023 and another 7% in FY24, based on current Zacks estimates. McDonald’s has topped our bottom line estimates for six quarters running, including a 14% beat in the last two periods. The company’s earnings outlook for FY23 and FY24 is still up big from earlier this year and its EPS outlook for 2025 is improving
McDonald’s is projected to expand its revenue by 10% this year and grow its sales by another 7% next year. On top of that, its overall comparable sales are projected to climb by over 9% in 2023.
Image Source: Zacks Investment Research
McDonald’s stock has crushed the S&P 500 over the last 25 years and outpaced the benchmark over the last decade, up 170% vs. 150%. MCD has also rather handily outperformed Starbucks over the last 10 years.
MCD shares have climbed around 10% during the trailing 24 months vs. the benchmark’s 8% drop, despite its recent correction. McDonald’s shares have fallen roughly 13% from the end of June.
The selling appears to have been spurred, at least in some part, by profit-taking after MCD rallied to new all-time highs. McDonald’s shares are currently trading below their 50-day and 200-day moving average.
Thankfully, MCD found support recently after hitting its most oversold RSI levels since the initial Covid-19 selloff. The stock was also approaching its 200-week moving average before buyers started to step in. Plus, McDonald’s is trading about 24% below its average Zacks price target.
On the valuation side, MCD is trading at an 8% discount to its 10-year median and 30% below its own highs at 21.0X forward 12-month earnings. McDonald’s stock is now trading around its lowest forward earnings multiples during the last five years and nearly in line with the Zacks Retail sector.
Bottom Line
McDonald’s is one of only around 65 S&P 500 Dividend Aristocrats, which are companies that have both paid and raised dividends for at least 25 straight years.
Wall Street remains very high on the stock given its ongoing strength in a key area of the economy, with 75% of the 29 brokerage recommendations Zacks has sitting at “Strong Buys” or “Buy,” with no sells. Wall Street and customers know what to expect from MCD and they will likely keep coming back for more.