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McDonald's Corp MCD

Morningstar Rating
$295.92 +2.01 (0.68%)
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Company Report

McDonald's Earnings: Slight Miss Doesn't Change Our Constructive Stance on Industry Stalwart

While wide-moat McDonald's slightly missed our earnings expectations across the board during its fourth quarter of 2023, we continue to believe the firm is arguably the best positioned in our global coverage to benefit from restaurant digitization, particularly through its loyalty program, and an ongoing global mix-shift toward chained restaurant brands. Investors should capitalize on an opportunity to load up on shares at a slight discount after a 3%-4% pullback in intraday trading, leaving the firm trading at about an 8% discount to our $310 intrinsic valuation, which we expect to leave largely unchanged.

Price vs Fair Value

MCD is trading at a 5% discount.
Price
$295.92
Fair Value
$963.00
Uncertainty
Low
1-Star Price
$975.00
5-Star Price
$873.70
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

With a modernized restaurant real estate footprint after $9 billion in remodeling investments, McDonald’s is well positioned to take advantage of evolving digital ordering habits.

Bears

Wage inflation, particularly in the U.S., could result in an increase in price competition, additional investments in automation, and a shift toward relatively cheaper substitutes in the food-at-home category.

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News

Trading Information

Previous Close Price
$293.91
Day Range
$293.25296.67
52-Week Range
$245.73302.39
Bid/Ask
$292.58 / $297.33
Market Cap
$213.70 Bil
Volume/Avg
325 / 3.1 Mil

Key Statistics

Price/Earnings (Normalized)
24.89
Price/Sales
8.28
Dividend Yield (Trailing)
2.11%
Dividend Yield (Forward)
2.26%
Total Yield
3.53%

Company Profile

McDonald’s is the largest restaurant owner-operator in the world, with 2023 system sales of $130 billion across nearly than 42,000 stores and 115 markets. McDonald’s pioneered the franchise model, building its footprint through partnerships with independent restaurant franchisees and master franchise partners around the globe. The firm earns roughly 60% of its revenue from franchise royalty fees and lease payments, with most of the remainder coming from company-operated stores across its three core segments: the United States, internationally operated markets, and international developmental/licensed markets.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Large Core
Total Number of Employees
150,000

Competitors

Valuation

Metric
MCD
QSR
YUM
Price/Earnings (Normalized)
24.8923.9625.78
Price/Book Value
8.52
Price/Sales
8.284.995.40
Price/Cash Flow
21.7122.4422.55
Price/Earnings
MCD
QSR
YUM

Financial Strength

Metric
MCD
QSR
YUM
Quick Ratio
1.030.880.99
Current Ratio
1.161.011.26
Interest Coverage
8.603.374.54
Quick Ratio
MCD
QSR
YUM

Profitability

Metric
MCD
QSR
YUM
Return on Assets (Normalized)
16.74%6.44%24.79%
Return on Equity (Normalized)
54.01%
Return on Invested Capital (Normalized)
21.67%9.94%55.35%
Return on Assets
MCD
QSR
YUM
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