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McDonald's Corporation (MCD)

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295.21 +3.10 (+1.06%)
At close: November 1 at 4:00 PM EDT
294.96 -0.25 (-0.08%)
After hours: 8:00 PM EDT
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DELL
  • Previous Close 292.11
  • Open 294.51
  • Bid 294.03 x 900
  • Ask 295.25 x 800
  • Day's Range 293.28 - 296.86
  • 52 Week Range 243.53 - 317.90
  • Volume 2,955,317
  • Avg. Volume 3,405,023
  • Market Cap (intraday) 211.767B
  • Beta (5Y Monthly) 0.73
  • PE Ratio (TTM) 25.90
  • EPS (TTM) 11.40
  • Earnings Date Oct 29, 2024
  • Forward Dividend & Yield 7.08 (2.40%)
  • Ex-Dividend Date Dec 2, 2024
  • 1y Target Est 323.13

McDonald's Corporation operates and franchises restaurants under the McDonald's brand in the United States and internationally. It offers food and beverages, including hamburgers and cheeseburgers, various chicken sandwiches, fries, shakes, desserts, sundaes, cookies, pies, soft drinks, coffee, and other beverages; and full or limited breakfast, as well as sells various other products during limited-time promotions. The company owns and operates under various structures comprising conventional franchise, developmental license, or affiliate. McDonald's Corporation was founded in 1940 and is based in Chicago, Illinois.

www.mcdonalds.com

100,000

Full Time Employees

December 31

Fiscal Year Ends

Restaurants

Industry

Recent News: MCD

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Related Videos: MCD

McDonald's biggest challenge is 'price competitiveness': Analyst

McDonald's (MCD) beat profit and revenue expectations during its third quarter as consumers continue to prioritize value when dining out. Morningstar analyst Sean Dunlop joins Morning Brief to discuss the success of the fast-food giant's value offerings and some of the biggest challenges ahead. Dunlop expects McDonald's to continue pushing its value meals and other deals: "When you see restaurants struggle with comparable store sales, kind of the two levers that they have to pull are menu innovation and promotions and advertising. We've definitely seen plenty of both from McDonald's, and should expect to continue to see plenty of both from McDonald's." He notes that the $5 Meal Deal was an effective initiative that helped bring back lower-income consumers to McDonald's, which could lead the company to continue rolling out promotions to boost sales. Moving forward, Dunlop argues that the biggest challenge for McDonald's is "price competitiveness": "You think about 30-basis-points comparable store sales growth in the US outperforming the industry by a wide margin. That's very concerning. Right now, we live in an environment where wage growth is consistently higher than expected food cost inflation for restaurants. That means that as the quarters progress, they're growing less and less competitive from a price standpoint with grocery stores. And we're seeing consumer traffic continue to favor that cheaper grocery store channel." Watch Dunlop talk more about McDonald's third quarter earnings and what the brand's recent E. coli outbreak could mean for its fourth quarter. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. This post was written by Melanie Riehl

Performance Overview: MCD

Trailing total returns as of 11/1/2024, which may include dividends or other distributions. Benchmark is

.

YTD Return

MCD
1.36%
S&P 500
20.10%

1-Year Return

MCD
15.33%
S&P 500
36.60%

3-Year Return

MCD
28.69%
S&P 500
24.39%

5-Year Return

MCD
68.57%
S&P 500
88.60%

Compare To: MCD

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Statistics: MCD

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Valuation Measures

Annual
As of 11/1/2024
  • Market Cap

    211.77B

  • Enterprise Value

    262.97B

  • Trailing P/E

    25.92

  • Forward P/E

    23.26

  • PEG Ratio (5yr expected)

    2.65

  • Price/Sales (ttm)

    8.24

  • Price/Book (mrq)

    --

  • Enterprise Value/Revenue

    10.14

  • Enterprise Value/EBITDA

    21.54

Financial Highlights

Profitability and Income Statement

  • Profit Margin

    31.79%

  • Return on Assets (ttm)

    --

  • Return on Equity (ttm)

    --

  • Revenue (ttm)

    25.94B

  • Net Income Avi to Common (ttm)

    8.25B

  • Diluted EPS (ttm)

    11.40

Balance Sheet and Cash Flow

  • Total Cash (mrq)

    792M

  • Total Debt/Equity (mrq)

    --

  • Levered Free Cash Flow (ttm)

    --

Research Analysis: MCD

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Earnings Per Share

Consensus EPS
 

Revenue vs. Earnings

Revenue 6.87B
Earnings 2.25B
 

Analyst Recommendations

  • Strong Buy
  • Buy
  • Hold
  • Underperform
  • Sell
 

Analyst Price Targets

280.00 Low
323.13 Average
295.21 Current
360.00 High
 

Company Insights: MCD

Research Reports: MCD

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  • Carefully managed expenses and higher U.S. comps lead to earnings beat

    McDonald's is the world's largest restaurant chain, with more than 40,000 fast-food restaurants in over 100 countries. With a market capitalization of about $210 billion, MCD is a large-cap growth stock.

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  • October Resets Economic, Interest Rate Expectations Investors came into

    October Resets Economic, Interest Rate Expectations Investors came into October with mixed expectations. Signs of a cooling jobs market in late summer stirred comments that the Fed had remained in restrictive mode too long, putting fragile economic growth at risk. On the upside, investors consoled themselves, the Fed's own dallying likely positioned the central bank to cut rates aggressively into year-end. A strong September nonfarm payrolls report early in October jolted investors out of that mindset. Subsequent data suggested that, far from drifting toward recession, the economy was strengthening slightly coming out of summer and into fall. Investors also had to reassess their expectations for the Fed's rate-cutting schedule through year-end 2024. While the market still appears to anticipate a cumulative 100-basis-points (bps) in rate cuts in 2024, that outcome is no longer a slam-dunk. Jobs Bounce Back Spikes Rates September nonfarm payrolls, reported on 10/4/24, shocked the market and upended expectations that the employment economy was cooling rapidly. The Bureau of Labor Statistics (BLS) reported that the U.S. economy generated 254,000 new jobs in September, well above the Argus forecast of 135,000 and the consensus estimate of 140,000. Given September's blow-out number and upward revisions to August and July, the three-month jobs growth average jumped to 186,000 -- after being closer to 120,000 following August payrolls. The unemployment rate dipped to 4.1%, after coming within a whisker of triggering the Sahm Rule (a usually reliable recession indicator) one month before. Jobs were not only plentiful in September; they continued to generate wage growth above the inflation rate. Average hourly earnings increased 4.0% year over year. Economic Data Churns Along The NFIB's Small Business Optimism Index came in at 91.5, marking 33 consecutive months below the 50-year average of 98. This index has been battered by inflation, and before that by difficulty in finding qualified workers. The Uncertainty Index rose 11 points to 103, the highest reading recorded in this series. Uncertainty, according to the NFIB, makes businesses hesitant to invest in inventory, spend on expansion, and hire new workers. Small businesses are feeling the pain of high financing costs and lingering inflation. The trade deficit, which is reported with an uncommon lag, improved markedly in August to $70.4 billion -- 10% narrower than in July. Exports rose $5.3 billion, and imports declined $3.2 billion from July. All the decrease was in the goods deficit, while the services surplus ticked slightly higher. This represented the lowest monthly trade deficit since March. For 1Q24 and 2Q24, the net exports-imports balance has been overweighted to imports, which is subtractive to GDP. Relative strength in exports could contribute to third-quarter GDP growth. The inflation data released at mid-month was a bit warmer than expected. All-items CPI rose 0.2% month over month and 2.4% year over year. While both missed consensus by one tick, the annual change was the lowest since March 2021, before the onslaught of inflation. The core index rose 3.3% annually, also a tick higher than expected. A day later, the Producer Price Index (PPI) cheered the market with no change on a month-over-month basis. The year-over-year change of 1.8% was a tick higher than expected, but 20 basis points below the Fed's 2% target. Core PPI (less food and energy) was right at the Fed's 2% target. Retail sales provided some good news for the market, rising 0.4% in September from a 0.1% gain in August. Sales were ahead of consensus expectations. Excluding vehicles, September retail sales were up 0.5%; and excluding vehicles and gas, sales were up 0.7%. Vehicle sales are being hurt by sticker shock and high financing costs, while the decline in gas sales mainly reflects a consumer-friendly decline in gasoline costs. Struggles at Boeing have pressured exports, given the importance of aerospace to goods exports. The machinists' strike is just the latest headache for the company, which has faced headwinds in both its commercial and defense & space units. Industrial production decreased 0.3% in September, which was worse than the 0.1% consensus call. The decline was mainly due to the strike at Boeing along with the two major hurricanes that hit the Southeast. Reflecting Boeing, capacity utilization for aerospace & miscellaneous transportation decreased 8.3%. Utilization was 77.5% in September, about 2.2 points below the long-run average. In the months preceding the Fed's first rate cut of the cycle in September, something like optimism returned to the long-depressed housing industry. But rates as noted have spiked higher after first coming down around the September rate cut. The effect of lower rates on housing will be positive. Given the huge number of sub-4% mortgages or homes with no mortgage, however, Argus is not looking for a housing surge like that seen in the pandemic period. September existing home sales fell to a 14-year low, coming in at a seasonally adjusted annual rate (SAAR) of 3.84 million units. Supply has improved, but the currently most-desirable homes -- entry-level for those starting families -- remain in short supply nationwide. Home prices in aggregate are simply too high for many would-be buyers. Sales in September mainly were for deals concluded in the months preceding the Fed's rate cut. But few expect the existing homes market to recover rapidly. New home sales, by contrast, ticked higher to a 738,000 SAAR for September from 709,000 for August. New home sales, which account for about one-sixth of all home sales, were at their highest level in nearly a year and a half. Builders may finally be realizing that the scarcity of affordable starter homes creates an opportunity to stimulate homebuilding. Consumer sentiment hit a six-month high in October, coming at 70.5 from 70.1 in September in response to prospects for interest-rate relief. The University of Michigan Consumer Sentiment Index has been volatile and could easily move down again. But the combination of higher retail sales, new home sales, and sentiment sent a positive message to a market worried about Boeing and the industrial economy. GDP Outlook Higher In mid-October, Argus' Chief Economist Chris Graja, CFA, raised the Argus third-quarter 2024 GDP forecast to 3.0%, from a prior 1.6% estimate. In his multi-input model, the biggest increases were to the services component within Personal Consumption Expenditures (PCE), reflecting recent strength in ISM's Services Purchasing Manager's Index; and higher contributions from equipment and intellectual property within nonresidential fixed investment, a proxy for corporate capital spending. Other growth drivers include the strong September nonfarm payrolls report, which is putting more money in employees' hands. The Atlanta Fed's GDPNow forecast for 3Q24 currently stands at 3.3%. At the end of August, the GDPNow forecast was around 2.0%. It has steadily ticked higher on the strong jobs, retail spending, and new-home sales data. Chris also raised the Argus 4Q24 GDP forecast to 2.3%, from a prior 1.7%. First-quarter GDP grew at 1.6%, while second-quarter GDP rebounded to 3.0% growth. Given net first-half strength and the higher second-half outlook, Argus now looks for GDP growth of 2.5% for all of 2024, raised from a prior 1.9%. Chris retained Argus' forecast for 2.0% GDP growth in 2025. Conclusion Bond yields hit multi-month lows following the Fed's September rate cuts but started ticking higher soon after. The nonfarm payrolls report sent yields spiking higher across the maturity spectrum. Also following the report, the CME's FedWatch tool went from a 30% probability of a 50 bps cut at the November FOMC meeting, to a 10% probability of such an aggressive cut. And the probability of an additional 75-bps cut through year-end was cut in half to 26%, compared with 54% prior to the jobs report. In what has been a volatile month, the S&P 500 was holding a 1%-plus gain for October heading into the final trading week. Questions about the pace of Fed rate cuts, along with an earnings season that is shaping up to be weaker than the second-quarter EPS season, have contributed to the broader uncertainty that has surrounded a too-close-to-call presidential election. The post-election sigh of relief drove strong gains in November and December of 2016 and 2020, and investors are hoping for more of the same to cap a solid 2024 for stocks.

     
  • McDonald's Emphasis on Value and Accelerating the Arches Strategy Drive Recent Market Share Gains

    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.

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  • McDonald's Earnings: Results Stabilize in Record Time as Value Platforms Drive Market Share Gains

    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.

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