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What’s Driving McDonald’s Stock Price?

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Stock performance

Since the announcement of its 1Q17 earnings on April 25, 2017, McDonald’s (MCD) stock has risen 10.1%. As of May 23, 2017, the company was trading at $147.82—close to its 52-week high of $148.88.

Big Mac promotions, beverage value offerings, expansion of the company’s All Day Breakfast menu items, and an enhanced customer experience at its restaurants helped McDonald’s post global same-store sales growth of 4%. It’s outperforming analysts’ estimate of 1%. Along with these factors, better-than-expected 1Q17 earnings appear to have increased investors’ confidence, which led to a rise in McDonald’s stock price.

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Year-to-date performance

So far, 2017 has been a good year for McDonald’s. Its stock has risen 21.4% YTD (year-to-date). During the same period, its peers Wendy’s (WEN), Jack in the Box (JACK), and Restaurants Brands International (QSR) have returned 19.6%, -9.7%, and 25.1%, respectively.

The S&P 500 INDEX (SPX) and the Consumer Discretionary Select Sector SPDR Fund (XLY) have returned 7.1% and 9.8%, respectively, YTD. XLY has invested 10.3% of its holding in restaurant and travel companies.

Series overview

In this series, we’ll look at analysts’ revenue and earnings estimates for the next four quarters. We also cover management’s guidance for 2017. Finally, we’ll discuss McDonald’s valuation multiple and analysts’ recommendations.

In the next part, we’ll look at McDonald’s revenue estimates for the next four quarters.

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