Mcdonalds Holdings Company Japan (2702) AI Stock Analysis

• Market Cap: ¥995.86B
• Dividend Yield: 0.76%
• Average Volume (3M): 183.01K
• Price to Earnings (P/E): 29.1
• Beta (1Y): 0.27
• Revenue Growth: 2.73%
• EPS Growth: 18.30%
• Country: JP
• Employees: 2,517
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 52.03
• Shares Outstanding: 132,960,000
• 10 Day Avg. Volume: 186,930
• 30 Day Avg. Volume: 183,006
• PEG Ratio: 4.11
• Price to Book (P/B): 3.03
• Price to Sales (P/S): 2.04
• P/FCF Ratio: 54.08
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 274.55
• Revenue Forecast (FY): ¥416.75B

• Rating: 74 Outperform
• Price Target: ¥7,795.00 ▲(21.80% Upside)
• Action: Upgraded Date: 02/08/26
• Date: Action: Upgraded 02/08/26

The score is primarily driven by strong financial performance—consistent growth, improving margins, and an exceptionally low-debt balance sheet—partly offset by uneven free cash flow conversion. Technicals are supportive but look overextended, while valuation (higher P/E and low dividend yield) is a secondary headwind.

Positive Factors

Balance sheet strength

The company’s very conservative financing and near-zero debt materially reduce refinancing and interest-rate risk, giving management durable financial flexibility. Growing equity provides a buffer for downturns and supports capital allocation to franchising, remodels, or opportunistic investments over the next 2–6 months and beyond.

Consistent revenue growth and improving margins

Steady top-line expansion combined with expanded operating and net margins demonstrates structural earnings leverage in the core restaurant business and franchise income streams. This trend supports sustainable profitability, improved cash generation potential, and resilience to modest demand fluctuations over a multi-month horizon.

Asset-light master-franchise model

As Japan’s McDonald’s master franchisee, the business converts brand royalty, rental and franchise fees into recurring income while limiting store-level capex. This model provides durable, diversified revenue streams and scalable margins that persist over time and mitigate unit-level operating risk versus a fully company-owned global operator.

Negative Factors

Free cash flow volatility and weak conversion

Although operating cash flow improved, free cash flow has been inconsistent and materially below net income, suggesting recurring capex, working-capital swings, or timing effects. This limits sustained capacity for discretionary buybacks, higher dividends, or rapid reinvestment without drawing on reserves, reducing near-term financial optionality.

Modest gross margins with cost sensitivity

Relatively low gross margins increase exposure to food, commodity and labor cost inflation. Modest unit-level margins constrain the ability to absorb higher input costs without affecting profitability, requiring sustained pricing discipline or productivity gains to preserve long-term margin sustainability.

Moderate returns on equity and slowing ROE

Stable but only mid-single-digit to low-teens ROE implies the business generates solid but not rapidly compounding shareholder returns. Slight ROE softening reduces the pace at which retained earnings can meaningfully accelerate equity growth, potentially limiting long-term return expansion absent higher margin or revenue acceleration.

Mcdonalds Holdings Company Japan Business Overview & Revenue Model

Company Description

McDonald's Holdings Company (Japan), Ltd. operates a chain of hamburger restaurants under the McDonald's brand in Japan. As of December 31, 2021, it operated 2,942 restaurants. The company was formerly known as Japan McDonald's K.K. and changed its name to McDonald's Holdings Company (Japan), Ltd. in July 2002. McDonald's Holdings Company (Japan), Ltd. was founded in 1971 and is headquartered in Tokyo, Japan.

How the Company Makes Money

McDonald's Holdings Company Japan generates revenue through several key streams. Primarily, the company earns money from the sale of food and beverages at its restaurants, which include both company-operated locations and franchised outlets. The revenue model is heavily reliant on high sales volume driven by customer traffic, effective marketing campaigns, and seasonal menu promotions. Additionally, the company collects franchise fees and royalties from its franchisees, which contribute significantly to its overall earnings. Partnerships with suppliers ensure a steady supply of ingredients, while collaborations with delivery services enhance accessibility and convenience for customers, further boosting sales. The company also engages in promotional activities and limited-time offers that attract new customers and retain existing ones, contributing to its financial performance.

Mcdonalds Holdings Company Japan Financial Statement Overview

Summary

Strong fundamentals supported by steady revenue growth (2020–2025) and improving profitability (higher operating and net margins). Balance sheet strength is a major positive with extremely low leverage and growing equity, though free cash flow has been volatile and cash conversion remains only moderate versus net income.

Income Statement

Revenue has grown steadily from 2020 to 2025 (from ~¥288B to ~¥417B), with growth positive each year and accelerating again in 2025. Profitability has improved meaningfully over the period: operating profit margin expanded (about 10.6% in 2020 to ~12.1% in 2025) and net margin also rose (about 7.0% to ~8.1%), indicating stronger earnings leverage. A key watch-out is that gross margin remains relatively modest for the period (~18–21%) and dipped in 2021–2022 before rebuilding, suggesting ongoing sensitivity to food/labor costs.

Balance Sheet

The balance sheet is very conservatively financed, with extremely low leverage (debt-to-equity consistently near zero and improving into 2025), which reduces refinancing and interest-rate risk. Equity and assets have grown over time (equity up from ~¥175B in 2020 to ~¥280B in 2025), supporting balance sheet resilience. Returns on equity are solid and fairly stable (~9.6%–12.6% range), though slightly lower in 2025 versus 2024, indicating profitability is strong but not rapidly compounding year-over-year.

Cash Flow

Operating cash flow is strong and has improved since 2022 (from ~¥24B in 2022 to ~¥53B in 2025), aligning with the earnings recovery. Free cash flow is positive in most years and improved in 2025 (~¥15.7B), but it has been volatile (notably negative in 2022) and cash conversion is only moderate—free cash flow is well below net income in recent years (roughly 26%–33% of net income in 2023–2025). This points to ongoing reinvestment needs and/or working-capital/capex swings that can pressure near-term cash generation.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	407.80B	416.60B	405.48B	381.99B	352.30B	317.69B
Gross Profit	83.16B	86.57B	80.99B	72.29B	64.33B	63.43B
EBITDA	67.45B	68.66B	64.33B	54.48B	45.08B	45.18B
Net Income	33.86B	33.91B	31.96B	25.16B	19.94B	23.95B
Balance Sheet
Total Assets	335.40B	364.47B	337.09B	311.39B	277.36B	260.11B
Cash, Cash Equivalents and Short-Term Investments	74.82B	73.42B	71.33B	65.24B	61.36B	75.27B
Total Debt	193.00M	156.00M	263.00M	392.00M	480.00M	652.00M
Total Liabilities	72.08B	84.00B	84.05B	84.72B	70.64B	65.89B
Stockholders Equity	263.31B	280.47B	253.04B	226.67B	206.72B	194.22B
Cash Flow
Free Cash Flow	0.00	15.71B	13.50B	16.06B	-3.95B	17.43B
Operating Cash Flow	0.00	53.24B	52.69B	48.47B	23.77B	38.86B
Investing Cash Flow	0.00	-42.47B	-44.76B	-14.18B	-32.22B	-20.77B
Financing Cash Flow	0.00	-6.67B	-5.84B	-5.42B	-5.46B	-5.57B

Mcdonalds Holdings Company Japan Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6400.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2702, the sentiment is Positive. The current price of 6400 is below the 20-day moving average (MA) of 7070.00, below the 50-day MA of 6738.72, and above the 200-day MA of 6293.61, indicating a bullish trend. The MACD of 173.69 indicates Negative momentum. The RSI at 75.76 is Negative, neither overbought nor oversold. The STOCH value of 84.94 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:2702.

Mcdonalds Holdings Company Japan Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2702	74 Outperform	¥995.86B	29.13	13.08%	0.76%	2.73%	18.30%
7581	72 Outperform	¥338.21B	29.66	9.66%	0.55%	14.33%	36.83%
8153	70 Outperform	¥130.89B	29.00	―	0.70%	5.15%	47.13%
3197	63 Neutral	¥805.13B	48.82	9.53%	0.55%	15.58%	60.90%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
7550	59 Neutral	¥1.56T	38.22	15.82%	0.78%	11.29%	-4.88%
9861	53 Neutral	¥200.21B	52.43	―	0.69%	10.75%	-14.28%