Mcdonalds Holdings Company Japan (2702) AI Stock Analysis

• Market Cap: ¥1.02T
• Dividend Yield: 0.76%
• Average Volume (3M): 183.01K
• Price to Earnings (P/E): 25.1
• Beta (1Y): 0.22
• 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: ¥8,669.00 ▲(35.45% 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

Conservative balance sheet

Very low debt and growing equity (equity up from ~¥175B in 2020 to ~¥280B in 2025) materially reduce refinancing and interest-rate risk. This financial flexibility supports durable investment, franchise support, and resilience through downturns, enabling long-term strategic options.

Consistent revenue and margin improvement

Steady top-line growth with operating margin expansion (about 10.6% to ~12.1%) and net margin improvement (~7.0% to ~8.1%) indicates sustainable business momentum and improved cost or pricing leverage. This supports durable earnings power and reinvestment capacity over multiple years.

Master-franchise model with diversified income

The hybrid model—company-operated stores plus franchise royalties and rental/sublease income—generates recurring, less capital-intensive revenue streams. This diversification reduces operating leverage to store-level risk and creates predictable cash flows across cycles, supporting longevity.

Negative Factors

Volatile free cash flow

Despite stronger operating cash, free cash flow has swung materially (negative in 2022, modest in 2025) and converts only a fraction of net income. Persistent FCF volatility constrains capacity for steady capital returns, opportunistic M&A, or higher reinvestment without raising leverage.

Modest gross margins and cost sensitivity

Relatively low gross margins limit cushion against input inflation. In a labor- and commodity-sensitive QSR industry, modest gross margins make overall profitability and margin expansion reliant on tight cost control or price increases, which can be hard to sustain amid competition.

ROE plateauing; limited compounding

Stable but not accelerating ROE suggests earnings are not compounding rapidly relative to equity growth. For long-term shareholder value, stagnant ROE can indicate constrained pricing power, capital allocation limits, or competitiveness headwinds reducing the pace of return improvement.

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

The company earns revenue primarily through (1) restaurant sales and (2) franchise-related income. For company-operated restaurants, it generates revenue from direct sales of food and beverages to customers across dine-in, takeaway, and delivery; profitability is driven by customer traffic, menu pricing/mix, promotions, and cost control over ingredients, labor, occupancy, and logistics. For franchised restaurants, it earns franchise income that typically consists of ongoing royalties and other fees tied to franchisee sales, plus rental-related income where the company controls or subleases restaurant sites to franchisees; this model allows the company to monetize brand and system operations without bearing all store-level operating costs. Additional earnings can come from ancillary streams such as supplier-related rebates or distribution margins and marketing-related arrangements, but specific breakdowns and counterparties are null.

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	66.82B	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: Neutral

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 7375.50, below the 50-day MA of 6936.80, and above the 200-day MA of 6358.50, indicating a bullish trend. The MACD of 228.57 indicates Negative momentum. The RSI at 71.90 is Negative, neither overbought nor oversold. The STOCH value of 57.07 is Neutral, 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	¥1.02T	25.06	13.08%	0.76%	2.73%	18.30%
7581	72 Outperform	¥320.64B	22.28	9.66%	0.55%	14.33%	36.83%
8153	70 Outperform	¥128.12B	20.09	―	0.70%	5.15%	47.13%
3197	63 Neutral	¥759.40B	63.08	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	¥1.52T	28.68	15.36%	0.78%	11.29%	-4.88%
9861	53 Neutral	¥202.09B	72.52	―	0.69%	10.75%	-14.28%