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

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McDonald's (MCD - Free Report) ended the recent trading session at $259.54, demonstrating a +0.88% swing from the preceding day's closing price. The stock fell short of the S&P 500, which registered a gain of 1.08% for the day. Elsewhere, the Dow saw an upswing of 0.32%, while the tech-heavy Nasdaq appreciated by 1.58%.

The world's biggest hamburger chain's stock has dropped by 0.81% in the past month, falling short of the Retail-Wholesale sector's loss of 0.31% and the S&P 500's gain of 0.43%.

The upcoming earnings release of McDonald's will be of great interest to investors. The company's earnings report is expected on July 29, 2024. The company's upcoming EPS is projected at $3.08, signifying a 2.84% drop compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $6.66 billion, indicating a 2.55% increase compared to the same quarter of the previous year.

For the full year, the Zacks Consensus Estimates project earnings of $12.13 per share and a revenue of $26.58 billion, demonstrating changes of +1.59% and +4.24%, respectively, from the preceding year.

Investors should also pay attention to any latest changes in analyst estimates for McDonald's. These revisions help to show the ever-changing nature of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, there's been a 0.49% fall in the Zacks Consensus EPS estimate. McDonald's is holding a Zacks Rank of #3 (Hold) right now.

In the context of valuation, McDonald's is at present trading with a Forward P/E ratio of 21.22. This indicates a premium in contrast to its industry's Forward P/E of 19.49.

It is also worth noting that MCD currently has a PEG ratio of 2.96. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The average PEG ratio for the Retail - Restaurants industry stood at 1.91 at the close of the market yesterday.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. At present, this industry carries a Zacks Industry Rank of 157, placing it within the bottom 38% of over 250 industries.

The Zacks Industry Rank gauges the strength of our 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 use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.


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