McDonald's (MCD) Flagged As Today's Pre-Market Laggard

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.

Trade-Ideas LLC identified McDonald's ( MCD) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified McDonald's 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 $722.1 million.
  • MCD traded 60,153 shares today in the pre-market hours as of 8:44 AM.
  • MCD is down 2.4% today from yesterday's close.

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More details on MCD:

McDonald's Corporation operates and franchises McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company's restaurants offer various food products, soft drinks, coffee, and other beverages. The stock currently has a dividend yield of 3.5%. MCD has a PE ratio of 21.8. Currently there are 7 analysts that rate McDonald's a buy, 1 analyst rates it a sell, and 14 rate it a hold.

The average volume for McDonald's has been 7.1 million shares per day over the past 30 days. McDonald's has a market cap of $93.1 billion and is part of the services sector and leisure industry. The stock has a beta of 0.77 and a short float of 1.7% with 1.95 days to cover. Shares are up 3.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates McDonald's as a buy. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • 36.94% 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 13.61% compares favorably to the industry average.
  • MCD, with its decline in revenue, slightly underperformed the industry average of 7.0%. Since the same quarter one year prior, revenues fell by 11.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, MCD has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • MCDONALD'S CORP's earnings per share declined by 30.6% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, MCDONALD'S CORP reported lower earnings of $4.83 versus $5.56 in the prior year. For the next year, the market is expecting a contraction of 0.9% in earnings ($4.79 versus $4.83).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry average. The net income has significantly decreased by 32.6% when compared to the same quarter one year ago, falling from $1,204.80 million to $811.50 million.

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