McDonald's (MCD) AI Stock Analysis

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McDonald's

(NYSE:MCD)

Rating:69Neutral

Price Target:

$328.00

▲(6.52% Upside)

McDonald's overall stock score is driven by strong financial performance and cash flow, despite high leverage risks. Technical analysis and valuation indicate moderate potential, while earnings call insights reflect balanced growth prospects with challenges in key markets.

Positive Factors

Customer Traffic

The introduction of new menu items and marketing strategies, such as the Snack Wraps and other regional launches, have driven traffic and sales.

Growth Strategies

McDonald's has ample strategies and initiatives in place, such as the McValue platform and loyalty programs, which are expected to drive further growth.

International Markets

Trends in international markets like Europe and China are showing strong performance and market share gains for McDonald's.

Negative Factors

Lower Income Consumer Challenges

There is a continued double digit traffic weakness of the US lower income consumer, which poses a challenge for McDonald's.

Product Performance

The Chicken Strips did not perform well, with strong initial sales that quickly fell away amid poor media and customer reviews.

Sales Cannibalization

Poor economics and high sales cannibalization for new units are concerning themes across multiple markets.

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

Market Cap

$219.99B

Dividend Yield2.27%

Average Volume (3M)3.79M

Price to Earnings (P/E)26.4

Beta (1Y)0.32

Revenue Growth1.17%

EPS Growth2.09%

CountryUS

Employees150,000

SectorConsumer Cyclical

Sector Strength74

IndustryRestaurants

Share Statistics

EPS (TTM)3.19

Shares Outstanding713,604,430

10 Day Avg. Volume3,926,759

30 Day Avg. Volume3,793,972

Financial Highlights & Ratios

PEG Ratio-16.36

Price to Book (P/B)-54.85

Price to Sales (P/S)8.03

P/FCF Ratio31.21

Enterprise Value/Market Cap1.20

Enterprise Value/Revenue10.12

Enterprise Value/Gross Profit24.21

Enterprise Value/Ebitda19.09

Forecast

1Y Price Target

$338.48

Price Target Upside9.93% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering30

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

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:Aug 07, 2025

(Q2-2025)

% Change Since: 0.08%|

Next Earnings Date:Oct 23, 2025

Earnings Call Sentiment Neutral

The earnings call reflected moderate growth and technological advancements, particularly in international markets, contrasted by challenges in the U.S. market due to inflation and decreased consumer visits. While there are positive developments in loyalty and technology, the significant challenges in the U.S. market balance the sentiment.

Q2-2025 Updates

Positive Updates

Global Sales and Growth

McDonald's delivered global system-wide sales growth of over 6% in constant currency and global comparable sales growth of nearly 4% in the second quarter.

International Market Performance

Internationally Operated Market segment comp sales increased by 4%, with all markets driving positive comp sales growth. International Developmental Licensed Markets delivered comp sales growth of more than 5.5%, led by Japan.

Loyalty Program Success

The loyalty program has reached more than 185 million 90-day active users across 60 loyalty markets, with significant increases in customer visit frequency after joining.

Technology Advancements

Implementation of new technology such as edge computing and geofencing is underway, with benefits like increased restaurant uptime and reduced wait times.

Negative Updates

U.S. Market Challenges

Comp sales in the U.S. were up only 2.5%, with overall QSR traffic remaining challenging due to decreased visits by low-income consumers.

Inflation Impact on Europe

Despite improvements, continued high inflation across Europe presents challenges, with beef prices up by 20%.

Pressure on Low-Income Consumers

Visits across the industry by low-income consumers once again declined by double digits, putting pressure on the U.S. market.

Company Guidance

During McDonald's Second Quarter 2025 Investor Conference Call, the company shared several key metrics and strategic initiatives. Global system-wide sales growth was over 6% in constant currency, with global comparable sales growth nearly 4%. The Internationally Operated Market segment saw comparable sales increase by 4%, while the International Developmental Licensed Markets experienced comp sales growth of more than 5.5%, led by Japan. In the U.S., comp sales were up 2.5%, despite challenging industry conditions. McDonald's continues to expand its loyalty program, reaching over 185 million 90-day active users across 60 markets, contributing to increased visit frequency among members. The company is also on target to open approximately 2,200 restaurants globally in 2025, with plans for over 4% unit growth from nearly 1,800 net additions. McDonald's is advancing its Accelerating the Arches strategy by enhancing value offerings, driving menu innovation, and leveraging technology to improve restaurant efficiency and customer experience.

McDonald's Financial Statement Overview

Summary

McDonald's demonstrates strong profitability with a consistent increase in gross profit margin and EBIT margin. However, high leverage and negative equity on the balance sheet pose financial risks. Robust cash flow generation supports dividends and buybacks, but future stability may be threatened by market changes.

Income Statement

Very Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	26.06B	25.92B	25.50B	23.18B	23.22B	19.21B
Gross Profit	10.89B	14.71B	14.56B	13.21B	12.58B	9.75B
EBITDA	13.81B	13.95B	13.86B	10.90B	12.18B	9.11B
Net Income	8.39B	8.22B	8.47B	6.18B	7.55B	4.73B
Balance Sheet
Total Assets	59.55B	55.18B	56.15B	50.44B	53.85B	52.63B
Cash, Cash Equivalents and Short-Term Investments	1.88B	1.08B	4.58B	2.58B	4.71B	3.45B
Total Debt	55.87B	51.95B	53.09B	48.70B	49.35B	51.46B
Total Liabilities	62.31B	58.98B	60.85B	56.44B	58.46B	60.45B
Stockholders Equity	-2.76B	-3.80B	-4.71B	-6.00B	-4.60B	-7.82B
Cash Flow
Free Cash Flow	6.90B	6.67B	7.25B	5.49B	7.10B	4.62B
Operating Cash Flow	9.79B	9.45B	9.61B	7.39B	9.14B	6.27B
Investing Cash Flow	-3.65B	-5.35B	-3.18B	-2.68B	-2.17B	-1.55B
Financing Cash Flow	-5.06B	-7.50B	-4.37B	-6.58B	-5.60B	-2.25B

McDonald's Technical Analysis

Technical Analysis Sentiment

Positive

Last Price307.91

Price Trends

50DMA

299.47

Positive

100DMA

304.80

Positive

200DMA

298.86

Positive

Market Momentum

MACD

1.87

Negative

RSI

60.08

Neutral

STOCH

67.58

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 307.91 is above the 20-day moving average (MA) of 300.54, above the 50-day MA of 299.47, and above the 200-day MA of 298.86, indicating a bullish trend. The MACD of 1.87 indicates Negative momentum. The RSI at 60.08 is Neutral, neither overbought nor oversold. The STOCH value of 67.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DPZ	74 Outperform	$15.07B	25.77	-14.74%	1.47%	3.65%	5.71%
SBUX	71 Outperform	$102.53B	39.01	-47.07%	2.64%	0.60%	-35.19%
MCD	69 Neutral	$219.99B	26.35	-216.57%	2.27%	1.17%	2.09%
YUM	67 Neutral	$39.29B	27.92	-19.43%	1.94%	11.30%	-7.82%
WEN	65 Neutral	$1.91B	10.62	90.40%	8.94%	2.18%	-5.15%
Sector *	61 Neutral	$16.55B	10.17	-9.03%	3.33%	1.46%	-22.85%
CMG	58 Neutral	$57.16B	37.74	42.59%	―	8.57%	10.72%

* Consumer Cyclical Sector Average

Performance Comparison

MCD

McDonald's

307.91

46.15

17.63%

CMG

Chipotle

42.69

-12.86

-23.15%

DPZ

Domino's Pizza

442.42

10.51

2.43%

SBUX

Starbucks

91.02

17.76

24.24%

WEN

Wendy's

9.96

-6.21

-38.40%

YUM

Yum! Brands

142.56

8.40

6.26%

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.Date of analysis: Aug 06, 2025