McDonald's (MCD) AI Stock Analysis

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McDonald's

(NYSE:MCD)

Rating:71Outperform

Price Target:

$342.00

▲(11.27%Upside)

McDonald's overall stock score reflects strong financial performance and effective strategic initiatives, tempered by high leverage and mixed technical indicators. While the company is facing macroeconomic challenges, its ability to generate consistent cash flow and maintain profitability provides some resilience.

Positive Factors

Loyalty Initiatives

The Company aims to increase its active loyalty user base by 66% to 250 million 90-day active members by 2027, to drive greater mobile orders to its top 6 markets.

Market Expansion

McDonald's has gained traffic share in France, Germany, and Canada despite softness in these markets.

Product Strategy

Compelling product news, marketing muscle, and the introduction of new items like McCrispy Strips are expected to drive momentum throughout the year.

Negative Factors

Category Competition

Intense category competition and over-indexation to the lower income consumer are expected to cap EPS with limited multiple expansion.

Consumer Spending

Consumer pressures are broadening to the middle-income group, impacting U.S. comparable sales.

Marketing Missteps

Softer results in the UK and Australia reflect marketing missteps.

McDonald's (MCD) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$220.93B

Dividend Yield2.24%

Average Volume (3M)2.86M

Price to Earnings (P/E)27.3

Beta (1Y)0.36

Revenue Growth-0.22%

EPS Growth-3.83%

CountryUS

Employees150,000

SectorConsumer Cyclical

Sector Strength68

IndustryRestaurants

Share Statistics

EPS (TTM)2.67

Shares Outstanding715,032,700

10 Day Avg. Volume2,496,814

30 Day Avg. Volume2,864,461

Financial Highlights & Ratios

PEG Ratio-45.02

Price to Book (P/B)-59.22

Price to Sales (P/S)0.00

P/FCF Ratio33.62

Enterprise Value/Market Cap1.25

Enterprise Value/Revenue2.66

Enterprise Value/Gross Profit18.70

Enterprise Value/Ebitda4.95

Forecast

1Y Price Target

$331.70

Price Target Upside7.92% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering25

McDonald's Business Overview & Revenue Model

Company DescriptionMcDonald's Corporation (MCD) is a leading global fast-food restaurant chain, headquartered in Chicago, Illinois. Founded in 1940, McDonald's operates in the quick-service restaurant sector, offering a diverse menu that includes burgers, fries, chicken, breakfast items, soft drinks, milkshakes, and desserts. With over 38,000 locations in more than 100 countries, McDonald's serves approximately 69 million customers daily. The company is known for its iconic products such as the Big Mac, Quarter Pounder, and the Happy Meal, and is distinguished by its focus on quality, service, cleanliness, and value.

How the Company Makes MoneyMcDonald's makes money primarily through two main revenue streams: company-operated restaurant sales and franchisee fees. The company-operated restaurants generate revenue from direct sales of food and beverages to customers. However, a significant portion of McDonald's income comes from its franchise model. Franchisees pay initial fees and ongoing royalties, which are typically a percentage of sales, to operate McDonald's restaurants. Additionally, McDonald's owns a large portion of the real estate on which its restaurants are located and earns rental income from franchisees. This real estate strategy not only provides a steady income stream but also enhances the company's asset base. Strategic partnerships with suppliers and marketing collaborations help reduce costs and enhance brand value, further contributing to McDonald's profitability.

McDonald's Key Performance Indicators (KPIs)

Any

Comparable Sales Growth

Comparable Sales Growth
Measures the increase or decrease in sales at existing locations, providing insight into the company's ability to grow sales without expanding its footprint. It reflects customer demand and operational efficiency.

Chart InsightsMcDonald's comparable sales growth has significantly slowed since its peak in 2021, with recent declines reflecting macroeconomic challenges. The latest earnings call highlights a 1% global comp sales decline, with a sharper 3.6% drop in the U.S. due to pressures on low and middle income consumers. Despite these challenges, the McValue platform and successful marketing campaigns are helping maintain a positive guest count gap. Internationally, mixed performance persists, but market share gains in France offer a silver lining. The company remains cautious but optimistic about achieving its 2025 financial targets.

Data provided by:

Main Street Data

McDonald's Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: -3.30%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted several strategic initiatives, such as the introduction of the McValue platform, successful marketing campaigns, and an expanded focus on beverages. However, these positives were balanced by challenges such as declining global comp sales, pressure on low and middle income consumers, and specific market difficulties in the UK and Europe.

Q1-2025 Updates

Positive Updates

Introduction of McValue Platform

The new McValue platform was launched in the U.S., incorporating the $5 Meal Deal and other value offerings. The $5 Meal Deal resonated well with customers and is planned to continue through 2025.

Successful Global Marketing Campaign

The Minecraft Movie campaign was McDonald's largest global campaign with participation from over 100 markets, generating a strong consumer response and positive April performance.

Expansion of Beverage Strategy

McDonald's is focusing on expanding its beverage offerings, including a new beverage test in the U.S., inspired by insights from CosMc's, aiming to capture a larger share in beverages.

Positive Guest Count Gap

Despite challenges, McDonald's achieved a positive comp guest count gap compared to most near-end competitors in the U.S. and many international markets.

Negative Updates

Global Comp Sales Decline

Global comp sales declined by 1% in Q1 2025, with the U.S. experiencing a 3.6% decline, largely reflecting consumer challenges.

Challenges in the UK Market

The UK market experienced negative comps and is not yet gaining share, with execution being a primary issue.

Economic Pressures on Low and Middle Income Consumers

Low and middle income consumers in the U.S. faced significant economic pressure, with QSR traffic from these groups declining nearly double-digits.

High Inflation in Europe

Europe faced a more inflationary environment, particularly in beef, with high-single digit inflation impacting the P&L.

Company Guidance

During McDonald's First Quarter 2025 Investor Conference Call, the company provided guidance amidst a challenging macroeconomic environment, marked by a 1% decline in global comp sales. In the U.S., comp sales decreased by 3.6%, largely due to pressures on low and middle income consumers. Despite these challenges, McDonald's highlighted the success of their McValue platform, which includes a $5 Meal Deal, contributing to a positive comp guest count gap compared to competitors. Internationally, McDonald's saw a mixed performance, with a 1% decline in comp sales across major markets, although they achieved positive market share gains in France. The company remains cautious about consumer sentiment but reaffirmed their full-year 2025 financial targets, with adjusted earnings per share increasing by 1% in constant currencies, reaching $2.67. McDonald's also anticipates a $0.05 per share tailwind from foreign currency translation for the year.

McDonald's Financial Statement Overview

Summary

McDonald's strong financial health is reflected in its robust income statement performance and efficient cash flow management. The company demonstrates consistent revenue growth and profitability, though high leverage and negative equity are concerns. The ability to generate substantial free cash flow supports investment initiatives and shareholder returns, maintaining a competitive industry position.

Income Statement

Very Positive

McDonald's demonstrates strong profitability with a consistent increase in total revenue over the years. The company achieved a TTM revenue of $25.92 billion, up from $25.49 billion in the previous year, indicating stable growth. Gross profit margin remains robust, reflecting efficient cost management. The net profit margin and EBIT margin are solid, showcasing excellent operational efficiency. However, the slight decline in gross profit in the latest period warrants attention for cost control.

Balance Sheet

Positive

The balance sheet indicates a high level of leverage with a negative stockholders' equity, which is a potential risk factor. The debt-to-equity ratio is unfavorable due to negative equity, highlighting dependence on debt financing. However, the return on equity is strong, driven by high net income, indicating effective use of shareholders' investments. Despite the negative equity, the company maintains robust asset utilization.

Cash Flow

Very Positive

McDonald's exhibits strong cash flow generation with a healthy operating cash flow that consistently exceeds net income, reflecting strong cash conversion efficiency. The free cash flow remains strong despite fluctuations in capital expenditures, and the free cash flow to net income ratio remains favorable, indicating the company's ability to fund operations and investments internally. The positive trend in free cash flow growth over the years is a key strength.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
25.92B	25.49B	23.18B	23.22B	19.21B
	Gross Profit
14.71B	14.56B	13.21B	12.58B	9.75B
	EBIT
11.71B	11.65B	9.37B	10.36B	7.32B
	EBITDA
13.95B	13.86B	12.22B	12.03B	9.23B
	Net Income Common Stockholders
8.22B	8.47B	6.18B	7.55B	4.73B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.08B	4.58B	2.58B	4.71B	3.45B
	Total Assets
55.18B	56.15B	50.44B	53.61B	52.63B
	Total Debt
51.95B	53.09B	48.70B	48.64B	48.52B
	Net Debt
50.86B	48.51B	46.12B	43.93B	45.07B
	Total Liabilities
58.98B	60.85B	56.44B	58.21B	60.45B
	Stockholders Equity
-3.80B	-4.71B	-6.00B	-4.60B	-7.82B
Cash Flow		Free Cash Flow
6.67B	7.25B	5.49B	7.10B	4.62B
	Operating Cash Flow
9.45B	9.61B	7.39B	9.14B	6.27B
	Investing Cash Flow
-5.35B	-3.18B	-2.68B	-2.17B	-1.55B
	Financing Cash Flow
-7.50B	-4.37B	-6.58B	-5.60B	-2.25B

McDonald's Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price307.36

Price Trends

50DMA

311.07

Negative

100DMA

304.07

Positive

200DMA

297.65

Positive

Market Momentum

MACD

-0.43

Positive

RSI

42.07

Neutral

STOCH

17.99

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCD, the sentiment is Neutral. The current price of 307.36 is below the 20-day moving average (MA) of 312.06, below the 50-day MA of 311.07, and above the 200-day MA of 297.65, indicating a neutral trend. The MACD of -0.43 indicates Positive momentum. The RSI at 42.07 is Neutral, neither overbought nor oversold. The STOCH value of 17.99 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MCD.

McDonald's Risk Analysis

McDonald's disclosed 33 risk factors in its most recent earnings report. McDonald's reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

McDonald's Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CMG	80 Outperform	$70.87B	46.13	45.57%	―	12.57%	21.42%
MCD	71 Outperform	$220.93B	27.26	-216.57%	2.24%	-0.22%	-3.83%
SBUX	67 Neutral	$98.86B	31.62	-47.07%	2.76%	-0.50%	-24.28%
YUM	67 Neutral	$39.72B	28.49	-19.43%	1.93%	10.09%	-11.50%
DPZ	66 Neutral	$15.75B	26.37	-14.74%	1.36%	4.28%	13.76%
WEN	66 Neutral	$2.24B	12.46	90.40%	8.56%	2.18%	-5.15%
Sector *	62 Neutral	$6.83B	11.28	2.95%	3.88%	2.70%	-24.56%

* Consumer Cyclical Sector Average

Performance Comparison

MCD

McDonald's

307.36

59.37

23.94%

CMG

Chipotle

52.50

-10.10

-16.13%

DPZ

Domino's Pizza

468.21

-51.07

-9.83%

SBUX

Starbucks

89.64

10.02

12.58%

WEN

Wendy's

11.69

-3.80

-24.53%

YUM

Yum! Brands

144.83

9.67

7.15%

McDonald's Corporate Events

Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy

McDonald’s Annual Shareholders’ Meeting Decisions Unveiled

Neutral

May 23, 2025

On May 20, 2025, McDonald’s Corporation held its Annual Shareholders’ Meeting where key decisions were made regarding the company’s governance and strategic direction. The meeting included the election of 11 board members, approval of executive compensation, and ratification of Ernst & Young LLP as the independent auditor for 2025. Shareholder proposals on advertising risks, climate transition plans, and diversity in executive compensation were also considered, but did not receive majority support, indicating the company’s current strategic priorities and stakeholder interests.

The most recent analyst rating on (MCD) stock is a Buy with a $345.00 price target. To see the full list of analyst forecasts on McDonald’s stock, see the MCD Stock Forecast page.

Executive/Board ChangesBusiness Operations and Strategy

McDonald’s Appoints New Global Chief Experience Officer

Neutral

Mar 11, 2025

On March 10, 2025, McDonald’s Board of Directors announced changes to its senior management, appointing Gillian McDonald as Executive Vice President – Global Chief Restaurant Experience Officer, effective around May 1, 2025. This strategic move includes Manuel JM Steijaert taking over McDonald’s International Operated Markets division, potentially impacting the company’s operational focus and stakeholder interests.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.