Why McDonald’s Is Trading Close to Its 52-Week High

Stock performance

As of November 30, McDonald’s (MCD) hit a new 52-week high of $173.17 and closed the day at $171.97, which represents a rise of 5.3% since the announcement of its 3Q17 earnings on October 24.

Why McDonald’s Is Trading Close to Its 52-Week High

In 3Q17, McDonald’s posted EPS (earnings per share) of $1.76 on revenues of $5.75 billion. Analysts were expecting the company to post EPS of $1.77 on revenues of $5.73 billion. Also, the company has outperformed analysts’ SSSG (same-store sales growth) estimate of 3.6% in the United States, posting SSSG of 4.1%. The better-than-expected 3Q17 SSSG and McDonald’s management’s measures to drive SSSG could have increased investors’ confidence, leading to a rise in its stock price.

Year-to-date performance

2017 has been a good year for McDonald’s with its stock price rising 41.3% since the beginning of 2017. During the same period, Wendy’s (WEN), Jack in the Box (JACK), and Restaurant Brands International (QSR) have returned 10.1%, -7.3%, and 31.5%, respectively.

Notably, the broader comparative indices, the S&P 500 Index (SPX) and the SPDR Dow Jones Industrial Average ETF (DIA), have returned 18.3% and 23.0%, respectively. DIA has invested approximately 42.4% of its holdings in restaurant and travel companies.

Series overview

In this series, we’ll look at management’s guidance for 2017 and analysts’ revenue and EPS expectations for the next four quarters. We’ll also cover analysts’ recommendations and the company’s valuation multiple.

Let’s start our analysis by looking at analysts’ revenue for the next four quarters in the next part of this series.