McDonald's
MCD
$273.72
-0.28%
McDonald's Corporation is the world's largest restaurant brand, operating over 45,000 locations across more than 100 markets, with a menu spanning burgers, chicken, breakfast, and beverages. The company generates roughly 62% of its revenue from franchise royalties and rent, with the remainder from company-operated restaurants across three segments: the United States, international operated markets, and international developmental/licensed markets. Currently, the stock is under pressure due to a 20% pullback from its 52-week high, driven by concerns over consumer spending weakness and value competition, though some analysts see this as a buying opportunity given its attractive dividend yield and long-term resilience. The investor narrative centers on whether the company can navigate near-term demand softness while maintaining its franchise model's profitability and returning cash to shareholders.…
MCD
McDonald's
$273.72
Related headlines
Investment Opinion: Should I buy MCD Today?
We rate MCD a Hold, as the stock offers a solid dividend and defensive qualities, but near-term headwinds and valuation concerns limit upside. The analyst consensus is Buy with an average target of $323.58, implying 17.1% upside, but the wide range of targets ($250-$407) reflects uncertainty. The thesis is that MCD's franchise model and global scale provide long-term resilience, but the current price already reflects much of the good news.
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MCD 12-Month Price Forecast
MCD's fundamentals are solid, but the stock is caught between defensive appeal and growth concerns. The low beta and dividend provide downside support, but the negative relative strength and high PEG ratio suggest limited upside in the near term. The AI stance is neutral, as the risk-reward is balanced. An upgrade to bullish would require evidence of accelerating same-store sales or a significant valuation reset, while a downgrade to bearish would follow sustained negative traffic trends or margin compression.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on McDonald's's 12-month outlook, with a consensus price target around $316.06 and implied upside of +15.5% versus the current price.
Average Target
$316.06
0 analysts
Implied Upside
+15.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$250 - $407
Analyst target range
Analyst coverage is robust, with 31 analysts providing ratings. The consensus recommendation is 'Buy' with a mean rating of 2.12 (where 1 is Strong Buy and 5 is Sell). The average target price is $323.58, implying an upside of 17.1% from the current price of $276.26. The target range is $250.00 to $407.00, with the low target suggesting a potential 9.5% downside and the high target implying a 47.3% upside. The wide spread between low and high targets indicates significant uncertainty about the company's future performance, likely due to varying views on consumer spending and competitive pressures. Recent institutional ratings show a mix of Buy, Overweight, and Hold, with no downgrades, suggesting that analysts remain cautiously optimistic despite the stock's recent decline.
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Bulls vs Bears: MCD Investment Factors
MCD presents a classic value-versus-momentum dilemma. The bull case rests on solid revenue growth, a defensive franchise model, and an attractive dividend yield, while the bear case highlights valuation concerns, negative relative strength, and consumer spending risks. Currently, the bearish evidence is stronger given the stock's persistent underperformance and high PEG ratio, but the analyst consensus and dividend support provide a floor. The key tension is whether near-term demand softness is temporary or structural; if MCD can sustain revenue growth above 5% and stabilize margins, the stock is likely undervalued, but if consumer weakness deepens, further downside is possible.
Bullish
- Strong Revenue Growth: Q1 2026 revenue grew 9.4% YoY to $6.517B, with consistent sequential growth over the past year. This indicates robust demand despite consumer concerns, driven by menu innovation and global expansion.
- Attractive Dividend Yield: The dividend yield has risen to 2.35% after the stock's 20% pullback, near multi-year highs. With a 49-year dividend growth streak and a payout ratio of 59.7%, income investors are well-compensated for waiting.
- Analyst Consensus Buy: 31 analysts rate MCD a Buy with a mean rating of 2.12 and an average target of $323.58, implying 17.1% upside. The low target of $250 suggests limited downside, while the high target of $407 offers 47.3% upside.
- Franchise Model Resilience: 62% of revenue comes from franchise royalties and rent, providing stable, high-margin income. Operating margin of 46.1% and gross margin of 57.4% demonstrate the profitability of this asset-light model.
Bearish
- High Valuation vs Growth: The PEG ratio of 5.30x is elevated, suggesting the stock is expensive relative to its expected earnings growth. Trailing PE of 25.47x is above historical averages, leaving little room for error.
- Negative Relative Strength: MCD has underperformed the S&P 500 by 31.7% over the past year and 26.8% over six months. This persistent weakness signals ongoing selling pressure and investor skepticism.
- Consumer Spending Weakness: Rising gas prices and inflation are squeezing discretionary spending, particularly among low-income consumers, MCD's core demographic. This could pressure same-store sales and traffic in the near term.
- Negative ROE and Debt Concerns: ROE is -4.78% and debt-to-equity is -30.6, reflecting significant leverage and financial risk. The current ratio of 0.95 indicates potential liquidity constraints, though franchise model mitigates some risk.
MCD Technical Analysis
McDonald's stock is in a clear downtrend, with a 1-year price change of -10.2% and a 6-month decline of -15.6%. The current price of $276.26 sits near the lower end of its 52-week range, at approximately 81% of the range (calculated as (276.26 - 260.96) / (341.75 - 260.96) = 19% from the low). This positioning near the lows suggests the market is pricing in significant negative sentiment, but also potentially offering a value opportunity if fundamentals stabilize. The stock's beta of 0.419 indicates it is significantly less volatile than the market, which may appeal to defensive investors but also means it may lag in a market rally.
Beta
0.42
0.42x market volatility
Max Drawdown
-22.9%
Largest decline past year
52-Week Range
$261-$342
Price range past year
Annual Return
-10.4%
Cumulative gain past year
| Period | MCD Return | S&P 500 |
|---|---|---|
| 1m | -0.3% | +2.4% |
| 3m | -0.4% | +4.7% |
| 6m | -15.3% | +11.7% |
| 1y | -10.4% | +21.3% |
| ytd | -9.7% | +13.4% |
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MCD Fundamental Analysis
Revenue growth has been solid, with the most recent quarter (Q1 2026) showing revenue of $6.517 billion, up 9.4% year-over-year. This growth is supported by a multi-quarter trend: Q1 2025 revenue was $5.955 billion, Q2 2025 was $6.843 billion, Q3 2025 was $7.078 billion, and Q4 2025 was $7.009 billion, indicating a steady upward trajectory. The company's revenue segments show the US contributing $2.583 billion, High-Growth Markets $3.325 billion, and International Developmental Licensed Markets $0.610 billion, with the US and High-Growth Markets driving the bulk of sales. This growth is encouraging, but investors should monitor whether it can sustain momentum amid consumer spending concerns.
Quarterly Revenue
$6.5B
2026-03
Revenue YoY Growth
+9.4%
YoY Comparison
Gross Margin
55.9%
Latest Quarter
Free Cash Flow
$7.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is MCD Overvalued?
Given that McDonald's has positive net income, the PE ratio is the primary valuation metric. The trailing PE is 25.47x, while the forward PE is 19.75x, indicating that the market expects earnings growth. The gap between trailing and forward PE suggests a 22.5% expected earnings increase, which is optimistic but not unreasonable given the company's historical performance. The PEG ratio of 5.30x is high, implying that the stock is expensive relative to its expected growth rate, which could be a red flag for value investors. The dividend yield of 2.35% is attractive for income investors, especially after the recent price decline.
PE
25.5x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 19x~30x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are notable: MCD carries a high debt load with a debt-to-equity ratio of -30.6, indicating negative equity due to buybacks and debt, which amplifies financial leverage. The current ratio of 0.95 suggests potential short-term liquidity pressure, though the franchise model generates stable cash flows. Operating margin of 46.1% is strong, but any compression from value pricing or labor costs could impact earnings. The payout ratio of 59.7% leaves limited room for dividend increases if cash flow declines, and the negative ROE of -4.78% reflects the impact of leverage on shareholder equity.
FAQ
The key risks are: 1) Consumer spending weakness, which could reduce same-store sales and pressure margins; 2) High valuation, as the PEG ratio of 5.30x leaves little room for error; 3) Competitive pressures from value-focused chains and new entrants; and 4) Financial leverage, with a debt-to-equity ratio of -30.6, which could amplify losses in a downturn. The most severe risk is a prolonged recession that hits low-income consumers, MCD's core demographic, leading to negative traffic and earnings misses. The stock's low beta of 0.419 provides some downside protection, but it also means it may lag in a market rally.
The 12-month forecast is mixed, with a base case probability of 50% for a target range of $280-$323, a bull case probability of 25% for $323-$407, and a bear case probability of 25% for $250-$280. The base case assumes stable but soft consumer spending, with the stock recovering to the analyst average target of $323.58. The bull case requires a rebound in consumer confidence and successful strategic initiatives, while the bear case involves a deterioration in spending and margin pressure. The most likely scenario is the base case, with the stock trading in a range and offering a modest total return from dividends and price appreciation.
MCD's trailing PE of 25.47x is above its historical average, suggesting it is not cheap, but the forward PE of 19.75x implies expected earnings growth of 22.5%, which could justify the premium. The PEG ratio of 5.30x, however, indicates that the stock is expensive relative to its growth rate, which is a red flag. Compared to the broader market, MCD's PE is higher than the S&P 500's average, but its defensive characteristics and strong margins warrant a premium. Overall, MCD is fairly valued to slightly overvalued, and investors should wait for a better entry point or a clearer catalyst.
MCD is a good buy for long-term income investors seeking stability and a growing dividend, given its 2.35% yield and 49-year dividend growth streak. However, the stock is currently in a downtrend, with negative relative strength and a high PEG ratio of 5.30x, suggesting limited near-term upside. The analyst consensus is Buy with a 17.1% upside to the average target, but the wide range of targets indicates uncertainty. For growth-oriented investors, there may be better opportunities, but for those with a 3-5 year horizon, the current price offers a reasonable entry point, especially if it dips closer to the 52-week low of $260.96.
MCD is more suitable for long-term investment due to its defensive nature, low beta of 0.419, and consistent dividend growth. The stock's short-term performance is likely to be volatile, given the current downtrend and consumer spending concerns, but over a 3-5 year horizon, the franchise model and global scale should drive earnings growth and dividend increases. The dividend yield of 2.35% provides a cushion, and the payout ratio of 59.7% is sustainable. For short-term traders, the stock may offer opportunities on oversold bounces, but the lack of momentum makes it a less attractive trade. A minimum holding period of 3 years is recommended to ride out near-term volatility and benefit from compounding dividends.
