McDonald’s Stock Price Rose 4.4% on June 7

Stock performance

By the end of June 7, McDonald’s (MCD) was trading at $169.48, which represents a 4.4% increase from its June 6 closing price. McDonald’s management announced that it plans to trim its corporate structure by laying off an undisclosed number of corporate employees. Along with the stock upgrade by Kalinowski Equity Research, that announcement appears to have boosted investor confidence and its stock price.

McDonald’s Stock Price Rose 4.4% on June 7

Year-to-date performance

After posting a strong return of 41.4% in 2017, McDonald’s has been struggling in 2018. Despite yesterday’s surge, the company is still trading 1.5% lower since the beginning of the year.

Among its peers, Wendy’s (WEN), Jack in the Box (JACK), and Restaurant Brands International (QSR) have returned 3.8%, -16.1%, and -1.3%, respectively. Among the broader comparative indexes, the S&P 500 Index (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 3.6% and 11.1%, respectively.

Analysts’ expectations

For the next four quarters, analysts are expecting McDonald’s to post revenues of $21.1 billion, which represents a fall of 5.2% from ~$22.3 billion in the corresponding four quarters of the previous year. During the same period, the company’s earnings per share are expected to rise 11.0% to $7.76.

Valuation multiples

On June 7, McDonald’s was trading at a forward PE (price-to-earnings) multiple of 21.4x. On the same day, its peers Wendy’s, Jack in the Box, and Restaurant Brands International were trading at forward PE multiples of 28.0x, 17.1x, and 21.8x, respectively.