McDonald's Corporation (MCD): Today's Featured Leisure Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

McDonald's Corporation ( MCD) pushed the Leisure industry lower today making it today's featured Leisure laggard. The industry as a whole closed the day down 0.5%. By the end of trading, McDonald's Corporation fell $1.52 (-1.6%) to $91.75 on heavy volume. Throughout the day, 9.4 million shares of McDonald's Corporation exchanged hands as compared to its average daily volume of 5.4 million shares. The stock ranged in price between $90.40-$92.01 after having opened the day at $91.81 as compared to the previous trading day's close of $93.27. Other companies within the Leisure industry that declined today were: PokerTek ( PTEK), down 8.8%, Burger King Worldwide ( BKW), down 4.9%, Orbitz Worldwide ( OWW), down 4.5%, and Carrols Restaurant Group ( TAST), down 4%.
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McDonald's Corporation, together with its subsidiaries, franchises and operates McDonald's restaurants primarily in the United States, Europe, the Asia Pacific, the Middle East, and Africa. McDonald's Corporation has a market cap of $93.99 billion and is part of the services sector. The company has a P/E ratio of 17.5, equal to the average leisure industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Shares are down 7% year to date as of the close of trading on Thursday. Currently there are 15 analysts that rate McDonald's Corporation a buy, no analysts rate it a sell, and nine rate it a hold.

TheStreet Ratings rates McDonald's Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the leisure industry could consider PowerShares Dynamic Leisure&Entert ( PEJ) while those bearish on the leisure industry could consider ProShares Ultra Sht Consumer Services ( SCC).

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