McDonald’s has declined since a share price high in May, and value investors will be watching earnings closely.
MCD – Weekly Chart
The price of MCD is now $255.76 after a recent bounce. The $260 level will be significant resistance for the path ahead, with further support at $245 and $230.
For earnings per share, 31 analysts predict earnings of $3 per share for the fast food giant, compared to earnings of $2.68 per share in the same quarter of the previous year.
Analysts expect the company to deliver revenue of $6.56 billion, an increase of 11.75% over the prior-year quarter.
Shares have dropped more than 12% over six months, attracting a Buy rating from Wall Street analysts. However, there are potential signs of caution due to the macroeconomic environment. With an extensive global footprint, McDonald’s is vulnerable to a broader global conflict that could see American goods boycotted.
“McDonald’s resilient business model and track record of innovation make it a wise investment choice, despite potential risks,” said Seeking Alpha author Christos Nikolaou.
McDonald’s has beaten its EPS predictions 7 times, and revenue estimates 6 times in the past 8 quarters.
With a price/earnings ratio of 23 times, the stock is now more fairly valued and may see interest from value investors, especially if it falls further.
Hedge fund buyers supported the company in June of this year. Pictet North America Advisors boosted its holdings by 16.5% to $6.3 billion. Vanguard Group Inc. expanded its holdings to $19.1 billion in MCD. Marshall Wace increased its holdings by 108.6% to $459.2 million. These investors and others may want to add MCD holdings to their portfolio as its valuation drops.