McDonald’s (MCD) stock is closing in on fresh record highs above $320 per share, powered by a standout Q2 featuring strong global same-store sales, rapid expansion, and a loyalty program that’s keeping customers coming back. Quarterly results published earlier this month show earnings per share jumping by 7%, putting the company on track for record profits this year with a likely assault on the key $400 level in the months to come.
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And here’s the kicker: even at today’s levels, MCD still looks reasonably valued—especially with a potential dividend hike on the horizon next month that could reinforce the bullish trend. I remain confident in the stock’s upside and therefore, I maintain my Bullish stance on MCD stock.
A Turnaround Triumph of Top-Line Growth
For context, McDonald’s Q2 last year was a snooze, with flat revenue growth as inflation pinched wallets. This year’s first quarter wasn’t much better, with net sales dropping 3% to $5.96 billion, hit by a cautious U.S. consumer and a 3.6% dip in domestic same-store sales. However, Q2 flipped the script.
In particular, McDonald’s reported a 3.8% global same-store sales jump, the strongest in nearly two years, driven by a 2.5% U.S. increase, thanks to promotions like the Minecraft movie tie-in and McCrispy Chicken Strips. International markets shone, too, with 4% growth in operated markets like the UK and Australia, and over 5.5% in developmental licensed markets like Japan. Moreover, the company’s loyalty program, boasting over 185 million 90-day active users across 60 markets, drove higher visit frequency, while plans for 2,200 new restaurant openings in 2025, including 1,000 in China, added fuel to the growth engine.
To drive foot traffic, McDonald’s doubled down on value—extending its $5 meal deal through 2025 and reviving the $2.99 Snack Wrap to lure back price-sensitive customers. CEO Chris Kempczinski touched on this on the earnings call by saying: “When we get our value proposition right and execute with excellence, good performance follows.” Digital sales, which now account for over 30% of U.S. revenue, have also boosted check sizes, clearly demonstrating McDonald’s adaptation to current ordering habits.
Strong EPS Growth Creates Profitability Powerhouse
Beyond sales growth, McDonald’s excelled in growing profits, with Q2 seeing adjusted EPS climb to $3.19, a 7% year-over-year leap, beating Wall Street’s $3.15 estimate. Operating margins expanded to 47.2%, marking industry-record levels, thanks to an asset-light franchise model that keeps costs on the franchisee level while allowing the company to achieve tremendous economies of scale.
Kempczinski highlighted on the call that digital and tech investments, like IoT-enabled equipment, are also boosting productivity. Today, with a full-year adjusted operating margin target in the mid-to-high 40% range, analysts see record EPS in 2025, likely topping $12.30, as the company capitalizes on global growth and operational wins.
Dividend Hike on the Horizon
On another note, come September, McDonald’s is likely to announce its 49th consecutive annual dividend increase. With a current yield of 2.22% and EPS growth going strong, I think there’s room for a beefier hike than last year’s 10% bump to $1.67 per quarter.
The payout ratio remains close to 57% on the consensus EPS estimate of $12.33, which should support an above-average hike, especially since this is one of the lower payout ratios the company has featured over the past decade.
MCD’s Valuation Suggests a Tasty Deal for Shareholders
Bears may argue that after its recent rally, McDonald’s (MCD) looks pricey. But at roughly 25x forward earnings, I don’t see the stock trading at an excessive premium. Against the S&P 500’s ~22x P/E, McDonald’s appears fairly valued for a recession-resistant giant with steady EPS growth and one of the strongest brands in the world.
Its asset-light, franchise-driven model and global reach make it especially attractive to dividend growth investors, who view it as a reliable anchor in their portfolios. At current levels, I doubt value and income-focused buyers will hesitate—especially with tech and other sectors looking far more expensive.
Is MCD Stock a Buy, Sell, or Hold?
Wall Street remains relatively bullish on McDonald’s, despite trading close to new all-time highs, with the stock featuring a Moderate Buy consensus rating based on 15 Buy, 12 Hold, and two Sell recommendations over the past three months. MCD’s average stock price target of $338.32 suggests ~7% upside from current levels. Notably, this is above the company’s 52-week high and previous record high of $326.32.
MCD Poised for Upside as Profits and Dividends Climb
With accelerating sales, record profits on the horizon, and the prospect of a meaningful dividend hike next month, McDonald’s is well-positioned to continue rewarding shareholders—even as the stock hovers near all-time highs and naysayers fret about overvaluation. Its global expansion, digital push, and value-oriented promotions are driving both growth and customer loyalty, while its asset-light model helps protect margins.
At today’s valuation, McDonald’s offers an appealing balance of stability, income, and growth potential. And if momentum holds, new record highs may prove to be just the beginning.