McDonald's (MCD) AI Stock Analysis

• Market Cap: $233.51B
• Dividend Yield: 2.31%
• Average Volume (3M): 3.19M
• Price to Earnings (P/E): 27.4
• Beta (1Y): 0.25
• Revenue Growth: 1.26%
• EPS Growth: 2.87%
• Country: US
• Employees: 150,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 3.12
• Shares Outstanding: 712,154,360
• 10 Day Avg. Volume: 3,574,221
• 30 Day Avg. Volume: 3,186,657
• PEG Ratio: 5.41
• Price to Book (P/B): -121.88
• Price to Sales (P/S): 8.12
• P/FCF Ratio: 30.38
• Enterprise Value/Market Cap: 1.31
• Enterprise Value/Revenue: 11.39
• Enterprise Value/Gross Profit: 20.00
• Enterprise Value/Ebitda: 21.54
• 1Y Price Target: $347.33
• Price Target Upside: 5.50% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 26
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: $369.00 ▲(12.08% Upside)
• Action: Upgraded Date: 02/19/26
• Date: Action: Upgraded 02/19/26

The score is driven primarily by strong profitability and cash generation, reinforced by positive technical momentum and upbeat 2026 guidance for unit growth and margin expansion. The main offsets are balance-sheet risk (negative equity and high debt) and a relatively rich valuation (P/E 27.4), with near-term headwinds (weather, China macro, higher interest expense and CapEx) moderating the upside.

Positive Factors

High Profitability & Margin Resilience

Sustained industry-leading margins indicate durable pricing power, operational efficiency and strong unit economics. High margins support reinvestment, dividend payouts and buybacks, and provide a cushion against cyclical revenue dips over the next 2–6 months and beyond.

Robust Cash Generation

Consistent, large free cash flow and strong cash conversion (~70% of net income) underpin a capital-light growth model and steady capital returns. This cash capacity funds unit expansion, tech investments and shareholder distributions without relying on volatile capital markets.

Scalable Franchised Model & Growth Pipeline

A predominantly franchised footprint enables asset-light unit growth that scales royalty and rental income as system sales expand. Aggressive, multi-year restaurant additions and developer-license growth improve long-term revenue mix and geographic diversification while preserving company cash.

Negative Factors

Elevated Leverage & Negative Equity

Negative equity and high absolute debt raise financial vulnerability: less accounting cushion and greater interest sensitivity. In a downturn or rising-rate environment this constrains strategic flexibility, increases refinancing risk, and limits optionality for large M&A or aggressive buybacks.

Rising CapEx and Interest Expense

Higher planned capital outlays and rising interest costs compress free cash flow available for dividends and buybacks, and raise execution stakes. As investments scale (stores, tech), misexecution risks grow and near-term cash flexibility is reduced versus prior lower-capex years.

Regional Macro & Execution Risks

Persistent China and regional macro weakness can blunt unit economics and comps where expansion is concentrated. Concurrent tech and operational rollouts create execution risk: failures or delays reduce expected digital/loyalty benefits and could pressure franchisee economics long term.

McDonald's Business Overview & Revenue Model

Company Description

McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer hamburgers and cheeseburgers, chicken sandwiches and nuggets, wraps, fries, salads, oatmeal, shakes, desserts, sundaes, soft serve cones, bakery items, soft drinks, coffee, and beverages and other beverages, as well as breakfast menu, including biscuit and bagel sandwiches, breakfast burritos, hotcakes, and other sandwiches. As of December 31, 2021, the company operated 40,031 restaurants. McDonald's Corporation was founded in 1940 and is headquartered in Chicago, Illinois.

How the Company Makes Money

McDonald's generates revenue through multiple streams, primarily from the sale of food and beverages at its restaurants. The company's revenue model is structured around both company-operated and franchised locations. In franchised restaurants, McDonald's earns a significant portion of its revenue from franchise fees, which include an initial franchise fee and ongoing royalties based on a percentage of the franchisee's sales. Additionally, the company profits from the sale of food and supplies to these franchises. McDonald's also benefits from real estate transactions, as it often owns the land and buildings where its restaurants are located, generating rental income. Strategic partnerships, such as collaborations with beverage companies like Coca-Cola, and marketing initiatives also contribute to its earnings. Overall, McDonald's financial performance is bolstered by its strong brand presence, diversified menu offerings, and efficient operational model.

McDonald's Financial Statement Overview

Summary

Operations are very strong (high profitability with ~32% net margin and ~46% EBIT margin, plus solid cash generation with ~$10.6B operating cash flow and ~$7.2B free cash flow TTM). The key drag is balance-sheet risk: persistently negative equity (TTM about -$1.8B) alongside elevated and rising total debt (~$68.3B), which weakens the overall financial profile despite resilient earnings.

Income Statement

McDonald’s shows strong and consistent profitability, with TTM (Trailing-Twelve-Months) net margin around 32% and EBIT margin around 46%, supported by a solid gross margin near 57%. Revenue has been steadily rising from 2022–TTM, though growth has moderated (TTM growth ~2.4% versus stronger expansion in earlier years), and net income in TTM is only modestly above 2024—suggesting more of a mature, steady-growth profile than a high-growth one.

Balance Sheet

The balance sheet is the key weak spot: stockholders’ equity is negative across all periods shown (TTM about -$1.8B), which makes equity-based leverage metrics unfavorable and signals a thinner accounting capital cushion. Total debt is also elevated and has increased notably into TTM (~$68.3B), raising financial risk even though total assets have grown and the business remains profitable.

Cash Flow

Cash generation is strong, with TTM (Trailing-Twelve-Months) operating cash flow of about $10.6B and free cash flow of about $7.2B. Free cash flow runs at roughly 70% of net income (TTM), indicating earnings are meaningfully backed by cash, though free cash flow growth is slightly negative in TTM (down ~2.5%) and the cash flow coverage vs. earnings has softened versus 2024.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	26.89B	25.92B	25.50B	23.18B	23.22B
Gross Profit	15.31B	14.71B	14.56B	13.21B	12.58B
EBITDA	14.22B	13.95B	13.86B	10.90B	12.18B
Net Income	8.56B	8.22B	8.47B	6.18B	7.55B
Balance Sheet
Total Assets	59.52B	55.18B	56.15B	50.44B	53.85B
Cash, Cash Equivalents and Short-Term Investments	774.00M	1.08B	4.58B	2.58B	4.71B
Total Debt	68.27B	51.95B	53.09B	48.70B	49.35B
Total Liabilities	61.31B	58.98B	60.85B	56.44B	58.46B
Stockholders Equity	-1.79B	-3.80B	-4.71B	-6.00B	-4.60B
Cash Flow
Free Cash Flow	7.19B	6.67B	7.25B	5.49B	7.10B
Operating Cash Flow	10.55B	9.45B	9.61B	7.39B	9.14B
Investing Cash Flow	-3.82B	-5.35B	-3.18B	-2.68B	-2.17B
Financing Cash Flow	-7.13B	-7.50B	-4.37B	-6.58B	-5.60B

McDonald's Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 329.23
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCD, the sentiment is Positive. The current price of 329.23 is above the 20-day moving average (MA) of 321.91, above the 50-day MA of 314.56, and above the 200-day MA of 304.99, indicating a bullish trend. The MACD of 4.85 indicates Negative momentum. The RSI at 64.88 is Neutral, neither overbought nor oversold. The STOCH value of 51.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MCD.

McDonald's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MCD	75 Outperform	$233.51B	27.43	―	2.31%	1.26%	2.87%
YUM	74 Outperform	$45.23B	29.35	―	1.84%	11.60%	-4.33%
DPZ	68 Neutral	$12.94B	22.38	―	1.63%	3.92%	4.98%
CMG	67 Neutral	$50.43B	33.22	47.36%	―	7.31%	5.26%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
QSR	61 Neutral	$32.59B	29.30	26.75%	3.60%	16.82%	-29.91%
WEN	57 Neutral	$1.56B	9.62	87.63%	8.15%	-0.21%	0.16%

McDonald's Corporate Events

McDonald’s Adds Ford CEO Farley to Board

On February 4, 2026, McDonald’s Corporation expanded its Board of Directors from 11 to 12 members and elected James D. Farley, Jr., President and CEO of Ford Motor Company, as a new independent director. Farley will receive standard non-employee director compensation, and his appointment reflects the Board’s ongoing succession planning and emphasis on bringing in leaders with diverse, transformation-focused experience.

Farley’s election, announced publicly on February 10, 2026, adds more than three decades of global leadership and brand transformation expertise to McDonald’s governance. His background in digital innovation, customer-centric design, and large-scale operational modernization is expected to support McDonald’s efforts to modernize its systems and sustain growth, while the fact that half of the directors have joined since 2022 underscores the company’s push toward future-ready governance and strategic refreshment.

The most recent analyst rating on (MCD) stock is a Hold with a $325.00 price target. To see the full list of analyst forecasts on McDonald’s stock, see the MCD Stock Forecast page.