The coronavirus pandemic has taken a toll on different sectors of the stock market.
Not the least of which has been restaurants.
McDonald’s Corp. (NYSE: MCD) highlighted that toll by reporting a 30% drop in revenue during the last quarter ending June 30.
Fewer customers due to social distancing and smaller orders as millions of Americans remain furloughed from their jobs hit the fast-food giant right in the pocketbook.
McDonald’s Suffers in Value
McDonald’s rates a 37 on Adam’s system — that means 63% of the rest of the market is rated better.
McDonald’s Is Up, but for How Long?
The system ranks a company based on six different factors: momentum, size, volatility, value, quality and growth.
Here’s a look inside the numbers on McDonald’s:
- Value — Most of the stock market is overvalued. The same is true for McDonald’s. The company rates a 22 overall on value — 78% of all other companies are a better value. Its price-to-sales ratio rated a 30 because its ratio is nearly 7 times higher than the rest of the hospitality industry.
- Size — This is where McDonald’s rates the lowest (1) because it is a massive company — its market cap is nearly $150 billion.
- Momentum — McDonald’s earns a rating of 37 on momentum — 63% of all other stocks are stronger.
- Growth — To say the company’s sales have been hit hard is an understatement. Losing 30% of sales rates McDonald’s a 50 on growth.
- Quality — McDonald’s rates high on quality, where it earns an 80 — only 20% of all other companies rate better. Its margins and cash flow all rate 95 or higher.
- Volatility — Being a much larger company, McDonald’s isn’t nearly as volatile as some of its smaller competitors. The company earns an 84 rating on this factor — only 16% of all other stocks rated scored higher.
What You Should Do Now
It’s a big company and one that has been around since 1940 — so it’s weathered the ups and downs of the stock market.
However, looking at the present, the company remains overvalued despite a huge drop in quarterly sales.
Adam’s reliable stock rating system indicates that with lower ratings in both growth and value.
I’m not saying McDonald’s is a bad company to invest in.
But now is not the time to do it.