The Zacks Retail and Wholesale sector has underperformed the S&P 500 by a fair margin in 2022, down roughly 26%.
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One company residing in the sector, McDonald’s MCD, is on deck to report quarterly results before the market open on October 27th.
We’re all familiar with the fast-food chain and see those golden arches at seemingly every stop.
Currently, the fast-food titan carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of a D.
How does everything else stack up? Let’s find out.
Share Performance & Valuation
McDonald’s shares have been a bright spot in an otherwise dim market in 2022, down roughly 3% and easily outperforming the S&P 500.
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Over the last three months, shares have continued on their market-beating trajectory, up a marginal 0.2% vs. the S&P 500’s decline of 2.7%.
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The company’s valuation multiples could be seen as a bit stretched, with its 26.1X forward earnings multiple sitting above its 25.5X five-year median and reflecting a 10% premium relative to the Zacks Retail and Wholesale sector.
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MCD carries a Value Style Score of a D.
Quarterly Estimates
Over the last several months, five downwards earnings estimate revisions have come in, with the Zacks Consensus Trend pulling back marginally. The Zacks Consensus EPS Estimate of $2.57 suggests a Y/Y earnings decline of roughly 6.8%.
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Further, the Zacks Consensus Sales Estimate of $5.7 billion indicates an 8% decline from year-ago quarterly revenue of $6.2 billion.
Quarterly Performance & Market Reactions
McDonald’s has primarily exceeded earnings estimates, beating the Zacks Consensus EPS Estimate by an average of 4.4% over its last four quarters. In its latest print, the company penciled in a 4% bottom-line beat.
Revenue results have been mixed across its last four prints, with the company exceeding the Zacks Consensus Sales Estimate twice during the timeframe. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Additionally, it’s worth noting that the market has liked what it’s seen from the company’s results as of late, with shares moving upward following each of its last four prints.
Putting Everything Together
McDonald’s shares have been relatively strong in 2022, outperforming the general market across several timeframes.
Valuation levels could be seen as a bit stretched, with the company’s forward earnings multiple sitting above its five-year median and Zacks sector average.
Analysts have been bearish in their earnings outlook, with estimates suggesting a Y/Y decline in earnings and revenue.
Further, the company has consistently beaten earnings expectations as of late, but revenue results have been mixed across its last four.
Heading into the release, McDonald’s MCD carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of -1.3%.
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McDonald’s Corporation (MCD): Free Stock Analysis Report
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