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McDonald's (MCD)
NYSE:MCD
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McDonald's
(NYSE:MCD)
Rating:71Outperform
Price Target:
$342.00
▲(17.30%Upside)
Positive Factors
Financial Performance
McDonald's has transformed its business and achieved 45%+ operating margins and consistent 20%+ returns on invested capital, making it a leader in the quick-service restaurant segment.
Market Performance
McDonald's in the US is expected to outperform many peers, taking market share, which wasn't the case in the previous quarter.
Sales Growth
Accelerating US same-store sales as a key driver.
Negative Factors
Consumer Pressures
Concerns exist about lower-income pressures and a mixed international outlook, which could impact McDonald's longer-term growth.
Structural Challenges
There are ongoing structural pressures on fast food, including lower income consumer pressures and health and wellness considerations.
Valuation Concerns
The stock is valued above most peers despite structural headwinds, indicating potential overvaluation concerns.
McDonald's (MCD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$204.18B
Dividend Yield2.48%
Average Volume (3M)3.17M
Price to Earnings (P/E)25.2
Beta (1Y)0.36
Revenue Growth-0.22%
EPS Growth-3.83%
CountryUS
Employees150,000
SectorConsumer Cyclical
Sector Strength56
IndustryRestaurants
Share Statistics
EPS (TTM)2.67
Shares Outstanding715,032,700
10 Day Avg. Volume4,073,877
30 Day Avg. Volume3,170,797
Financial Highlights & Ratios
PEG Ratio-48.05
Price to Book (P/B)-59.50
Price to Sales (P/S)0.00
P/FCF Ratio30.66
Enterprise Value/Market Cap1.26
Enterprise Value/Revenue2.49
Enterprise Value/Gross Profit17.60
Enterprise Value/Ebitda4.63
Forecast
1Y Price Target
$328.89Price Target Upside12.81% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering26
McDonald's Business Overview & Revenue Model
Company DescriptionMcDonald'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 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
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.
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.
Data provided by:
Main Street Data
Main Street DataMcDonald's Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q1-2025)
| % Change Since: -8.27%|
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 demonstrates strong profitability with a high gross profit margin and EBIT margin, effective cash flow generation, and consistent revenue growth. However, the balance sheet reflects high leverage and negative equity, which poses some financial risk.Income Statement
McDonald's demonstrates strong profitability with a consistent increase in gross profit margin and EBIT margin over the years. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 56.8%, and the EBIT margin is 45.2%, indicating efficient cost management and operational excellence. Revenue growth has been steady, with a notable increase in recent years. However, slightly declining revenue in the TTM compared to 2024 could be an area to monitor.85
Very Positive
Balance Sheet
The balance sheet reflects high leverage, with a negative stockholders' equity indicating more liabilities than assets. The debt-to-equity ratio is not meaningful due to negative equity, but the company maintains a significant level of total debt. Despite this, McDonald's has managed to operate with a consistent return on equity, underlining its ability to generate profits. The equity ratio is negative, suggesting high financial risk due to leverage.65
Positive
Cash Flow
McDonald's shows robust cash flow generation with a strong operating cash flow to net income ratio of 1.16 in the TTM, reflecting effective cash conversion from earnings. Free cash flow growth is consistent, supporting dividend payments and share buybacks. However, the company's high leverage may pose risks to future cash flow stability if market conditions change.78
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 25.71B | 25.92B | 25.50B | 23.18B | 23.22B | 19.21B |
| Gross Profit | 14.61B | 14.71B | 14.56B | 13.21B | 12.58B | 9.75B |
| EBITDA | 13.88B | 13.95B | 13.86B | 10.90B | 12.18B | 9.11B |
| Net Income | 8.16B | 8.22B | 8.47B | 6.18B | 7.55B | 4.73B |
Balance Sheet | ||||||
| Total Assets | 56.33B | 55.18B | 56.15B | 50.44B | 53.85B | 52.63B |
| Cash, Cash Equivalents and Short-Term Investments | 1.24B | 1.08B | 4.58B | 2.58B | 4.71B | 3.45B |
| Total Debt | 52.76B | 51.95B | 53.09B | 48.70B | 49.35B | 51.46B |
| Total Liabilities | 59.78B | 58.98B | 60.85B | 56.44B | 58.46B | 60.45B |
| Stockholders Equity | -3.45B | -3.80B | -4.71B | -6.00B | -4.60B | -7.82B |
Cash Flow | ||||||
| Free Cash Flow | 6.70B | 6.67B | 7.25B | 5.49B | 7.10B | 4.62B |
| Operating Cash Flow | 9.48B | 9.45B | 9.61B | 7.39B | 9.14B | 6.27B |
| Investing Cash Flow | -3.63B | -5.35B | -3.18B | -2.68B | -2.17B | -1.55B |
| Financing Cash Flow | -5.38B | -7.50B | -4.37B | -6.58B | -5.60B | -2.25B |
McDonald's Technical Analysis
Negative
291.55
Price Trends
307.49
Negative
305.72
Negative
298.48
Negative
Market Momentum
-6.09
Positive
38.77
Neutral
18.44
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCD, the sentiment is Negative. The current price of 291.55 is below the 20-day moving average (MA) of 299.32, below the 50-day MA of 307.49, and below the 200-day MA of 298.48, indicating a bearish trend. The MACD of -6.09 indicates Positive momentum. The RSI at 38.77 is Neutral, neither overbought nor oversold. The STOCH value of 18.44 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (67)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $74.29B | 47.68 | 45.57% | ― | 12.57% | 21.42% | |
71 Outperform | $204.18B | 25.19 | -216.57% | 2.48% | -0.22% | -3.83% | |
70 Outperform | $103.53B | 33.11 | -47.07% | 2.66% | -0.50% | -24.28% | |
70 Outperform | $2.22B | 12.34 | 90.40% | 4.76% | 2.18% | -5.15% | |
68 Neutral | $40.91B | 29.35 | -19.43% | 1.93% | 10.09% | -11.50% | |
67 Neutral | ¥253.98B | 13.04 | 6.57% | 2.83% | 5.07% | -11.37% | |
66 Neutral | $15.29B | 25.59 | -14.74% | 1.53% | 4.28% | 13.76% |
* Consumer Cyclical Sector Average
Performance Comparison
MCD
McDonald's
291.55
42.56
17.09%
CMG
Chipotle
55.05
-7.60
-12.13%
DPZ
Domino's Pizza
446.39
-62.30
-12.25%
SBUX
Starbucks
92.11
16.15
21.26%
WEN
Wendy's
11.56
-4.46
-27.84%
YUM
Yum! Brands
148.41
18.50
14.24%
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.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.