What the McDonald's Downgrade Means For Mutual Fund Investors (MCD)

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What the McDonald's Downgrade Means For Mutual Fund Investors (MCD)

Shauna O'Brien

|

Mcdonald
Before the opening bell on Monday, RBC Capital cut estimates on McDonald’s (MCD). Here’s what the rating change means for investors.

Inside the Downgrade

The firm has lowered its price target on MCD from $115 to $110. This new price target suggests a 13% upside from the stock’s current price. According to the firm, MCD is seeing a negative start to its U.S. turnaround.

Analyst David Palmer commented: “We are lowering our EPS estimates to account for FX, increased labor costs, and slower US SSS momentum.”

“However, even with our lower EPS estimates, McDonald’s valuation metrics compare favorably to both restaurant and consumer staples peers.”

Lower Sales & Higher Labor Costs

McDonald’s recently announced that it will raise employee wages above minimum wage. The increase will add to expenses, while sales in the U.S. have been declining.

McDonald’s is up 3% YTD.

Mutual Funds to Watch

Investors interested in MCD may also consider a mutual fund as an alternative to owning the individual stock. The funds below currently hold the largest stakes in MCD.
Symbol Mutual Fund Stake
{% mutualfund VTSMX %} Vanguard Total Stock Market Index 1.76%
{% mutualfund VFINX %} Vanguard 500 Index 1.13%
VDIGX Vanguard Dividend Growth 0.57%

The Bottom Line

The funds listed above allow investors to gain exposure to MCD while remaining diversified. Investors interested in MCD may also be interested in Burger King (BKW) and Yum! Brands (YUM).

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Mcdonald

What the McDonald's Downgrade Means For Mutual Fund Investors (MCD)

Shauna O'Brien

|

Before the opening bell on Monday, RBC Capital cut estimates on McDonald’s (MCD). Here’s what the rating change means for investors.

Inside the Downgrade

The firm has lowered its price target on MCD from $115 to $110. This new price target suggests a 13% upside from the stock’s current price. According to the firm, MCD is seeing a negative start to its U.S. turnaround.

Analyst David Palmer commented: “We are lowering our EPS estimates to account for FX, increased labor costs, and slower US SSS momentum.”

“However, even with our lower EPS estimates, McDonald’s valuation metrics compare favorably to both restaurant and consumer staples peers.”

Lower Sales & Higher Labor Costs

McDonald’s recently announced that it will raise employee wages above minimum wage. The increase will add to expenses, while sales in the U.S. have been declining.

McDonald’s is up 3% YTD.

Mutual Funds to Watch

Investors interested in MCD may also consider a mutual fund as an alternative to owning the individual stock. The funds below currently hold the largest stakes in MCD.
Symbol Mutual Fund Stake
{% mutualfund VTSMX %} Vanguard Total Stock Market Index 1.76%
{% mutualfund VFINX %} Vanguard 500 Index 1.13%
VDIGX Vanguard Dividend Growth 0.57%

The Bottom Line

The funds listed above allow investors to gain exposure to MCD while remaining diversified. Investors interested in MCD may also be interested in Burger King (BKW) and Yum! Brands (YUM).

Sign up for Advisor Access

Receive email updates about best performers, news, CE accredited webcasts and more.

Popular Articles

Download our free report

Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.

Read Next

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