What to Know Ahead of MCD’s Quarterly Earnings Report

McDonald’s stock has retained 7% of its growth in the past year

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McDonald's Corp (NYSE:MCD) is scheduled to release its first-quarter results before the open on Thursday, April 28. Most recently, MCD reported earnings of $2.23 per share in the final quarter of 2021. Wall Street expects that McDonald's EPS (earnings per share) will be reported at a slightly decreased $2.17 in the upcoming Q1 earnings report.

The stock has a mixed post-earnings past, with a history of relatively muted next-day swings. Just two of its past eight reports saw positive next-session returns, though MCD only averaged a 1.3% swing, regardless of direction. This time around, the options pits are pricing in a 4.7% post-earnings return. 

Speaking of, options traders have taken a more bearish stance than usual of late. While calls are still outnumbering puts on an overall basis, the security's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 81% of readings from the past year, suggesting a healthier-than-usual appetite for long puts. 

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.08 stands higher than 60% of readings from the past year. This implies short-term options traders have been more put-biased than usual. 

MCD has managed to cling to a year-over-year lead of 7%, though it's lost 7.2% for the year. The stock staged an impressive rally off its mid-March lows, though this was rejected just below the $260 level. MCD was last seen trading flat at $248.58, with the 200-day moving average containing some of the stock's recent pullback. 

mcd chart april 27

Moreover, the fast food company offers a dividend yield of 2.22% with a forward dividend of $5.52. MCD has also increased its dividend on an annual basis since 1999 and have paid out dividends since 1976, making it one of the safest dividend stocks in the market.

McDonald’s is also estimated to end fiscal 2022 with 5.7% earnings growth and 3.4% revenue growth. In addition, the fast food name is estimated to increase their earnings by 11.1% and revenues by 5.3% for fiscal 2023. Nonetheless, McDonald's stock is overvalued by most metrics. MCD trades at a forward price-earnings ratio of 25.06 and a price-sales ratio of 8.10, which are incredibly high for the minimal growth its business is expected to generate.

 

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