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McDonald's Corporation (MCD) Weak In Early Morning Trading

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified McDonald's Corporation ( MCD) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified McDonald's Corporation as such a stock due to the following factors:

  • MCD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $424.9 million.
  • MCD traded 42,704 shares today in the pre-market hours as of 8:04 AM.
  • MCD is down 2.3% today from Friday's close.

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More details on MCD:

McDonald's Corporation franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. Its restaurants offer various food items, soft drinks, coffee, and other beverages, as well as breakfast menus. The stock currently has a dividend yield of 3.3%. MCD has a PE ratio of 17.9. Currently there are 11 analysts that rate McDonald's Corporation a buy, no analysts rate it a sell, and 13 rate it a hold.

The average volume for McDonald's Corporation has been 4.6 million shares per day over the past 30 days. McDonald's has a market cap of $97.7 billion and is part of the services sector and leisure industry. The stock has a beta of 0.28 and a short float of 1.1% with 2.32 days to cover. Shares are up 10.8% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates McDonald's Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 2.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MCDONALD'S CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MCDONALD'S CORP increased its bottom line by earning $5.36 versus $5.28 in the prior year. This year, the market expects an improvement in earnings ($5.60 versus $5.36).
  • The net income growth from the same quarter one year ago has exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 3.7% when compared to the same quarter one year prior, going from $1,347.00 million to $1,396.50 million.
  • Net operating cash flow has slightly increased to $1,509.80 million or 1.80% when compared to the same quarter last year. Despite an increase in cash flow, MCDONALD'S CORP's average is still marginally south of the industry average growth rate of 7.14%.
  • 44.55% is the gross profit margin for MCDONALD'S CORP which we consider to be strong. Regardless of MCD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCD's net profit margin of 19.71% compares favorably to the industry average.

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