McDonald's
MCD
$270.64
+0.82%
McDonald's Corporation is the world's largest restaurant brand, operating over 45,000 quick-service restaurants across more than 100 markets, with a menu spanning burgers, chicken, breakfast, and beverages. As a dominant player in the global fast-food industry, McDonald's generates roughly 62% of its revenue from franchise royalties and rent, giving it a highly franchised, asset-light business model that supports consistent cash flows. The current investor narrative centers on a significant stock price pullback of over 20% from its 52-week high, driven by concerns over consumer spending weakness and rising input costs, though the company's 49-year dividend growth streak and attractive 2.8% yield are drawing income-focused investors. Recent news highlights that the stock is trading at multi-year valuation lows, sparking debate on whether the market has overreacted to near-term headwinds, with some analysts viewing the pullback as a compelling entry point for long-term investors.…
MCD
McDonald's
$270.64
Related headlines
MCD 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on McDonald's's 12-month outlook, with a consensus price target around $323.90 and implied upside of +19.7% versus the current price.
Average Target
$323.90
0 analysts
Implied Upside
+19.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$250 - $407
Analyst target range
McDonald's is covered by 31 analysts, with a consensus recommendation of 'Buy' (mean rating 2.12 on a 1-5 scale, where 1 is Strong Buy). The average target price is $324.71, implying approximately 22.6% upside from the current price of $264.76. The distribution leans bullish, with recent ratings from Citigroup (Buy), Keybanc (Overweight), and JP Morgan (Overweight) reaffirming positive sentiment, while TD Cowen maintains a Hold. The target price range spans from a low of $250.00 to a high of $407.00, reflecting significant divergence in analyst views. The high target of $407 assumes a strong recovery in consumer spending, margin expansion, and multiple expansion, potentially driven by successful menu innovation and international growth. The low target of $250 suggests further downside risk from persistent inflation, competitive pressures, or a recession impacting sales. The wide spread ($157) indicates high uncertainty about the company's near-term trajectory. Recent analyst actions have been predominantly reaffirmations of existing ratings, with no major downgrades, suggesting that the sell-side remains cautiously optimistic despite the stock's decline. The consensus implies that the current price offers a favorable risk-reward for long-term investors, but the wide target range underscores the need for patience and tolerance for volatility.
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Bulls vs Bears: MCD Investment Factors
McDonald's presents a mixed picture: the stock is near its 52-week low with a forward P/E of 18.75x, offering a 22.6% upside to the average analyst target, supported by strong revenue growth and high profitability. However, the stock is in a sustained downtrend with negative momentum, margin compression, and consumer spending headwinds. The bull case currently has stronger evidence due to the attractive valuation and resilient fundamentals, but the key tension is whether the market's pessimism is overdone or if further downside risks from macro weakness will materialize. The resolution of consumer spending trends and margin stability will be critical in determining the stock's direction.
Bullish
- Attractive Valuation After Pullback: The stock is trading near its 52-week low of $260.96, with a forward P/E of 18.75x, near the lower end of its historical range. This represents a 22.6% upside to the average analyst target of $324.71, offering a compelling entry point for long-term investors.
- Strong Revenue Growth Momentum: Q1 2026 revenue grew 9.44% YoY to $6.517 billion, accelerating from 7.2% in Q4 2025. This consistent growth demonstrates resilience despite macroeconomic headwinds, driven by U.S. performance and international markets.
- High Profitability and Cash Flow: Net margin stands at 30.4% and operating margin at 44.3%, reflecting the asset-light franchise model. Free cash flow TTM is $7.039 billion, providing ample coverage for dividends and debt service, supporting the 2.8% dividend yield.
- 49-Year Dividend Growth Streak: McDonald's has increased its dividend for 49 consecutive years, making it a Dividend Aristocrat. The current yield of 2.8% is attractive for income investors, and the payout ratio of 59.7% leaves room for future increases.
Bearish
- Stock in Sustained Downtrend: The stock has declined 10.09% over the past year and 14.39% over six months, trading at 77.5% of its 52-week range. Negative momentum persists with a 1-month decline of 3.33%, and relative strength versus the S&P 500 is deeply negative at -26.56%.
- Margin Compression Risks: Gross margin declined to 55.9% in Q1 2026 from 57.5% in Q4 2025, and operating margin fell to 44.3% from 47.4% in Q3 2025. Rising commodity and labor costs could further pressure profitability.
- High Valuation on Trailing Basis: The trailing P/E of 25.47x is above the industry average of around 20-25x, suggesting the stock is not cheap on past earnings. The PEG ratio of 5.3x indicates the market is paying a premium for growth that may not materialize.
- Consumer Spending Weakness: Rising gas prices and inflation are draining consumer wallets, potentially reducing discretionary spending at quick-service restaurants. The stock's beta of 0.418 suggests it is defensive, but the downtrend reflects genuine macro headwinds.
MCD Technical Analysis
McDonald's stock is in a sustained downtrend, with a 1-year price change of -10.09% and a 6-month decline of -14.39%. The current price of $264.76 sits at 77.5% of its 52-week range (low $260.96, high $341.75), indicating the stock is near the bottom of its range. This positioning near the 52-week low suggests the market is pricing in significant pessimism, potentially offering a value opportunity if fundamentals stabilize, but also risks further downside if negative catalysts persist. Short-term momentum remains negative, with a 1-month price change of -3.33% and a 3-month change of -11.56%, showing accelerating declines. The 1-month trend aligns with the longer-term downtrend, confirming bearish momentum without signs of reversal. The stock's relative strength versus the S&P 500 is deeply negative, with a 1-year relative strength of -26.56%, indicating persistent underperformance. Key support lies at the 52-week low of $260.96, a break below which could signal further downside toward $250 or lower. Resistance is at the 52-week high of $341.75, and a breakout above that level would require a 29% rally, suggesting a strong reversal catalyst is needed. With a beta of 0.418, McDonald's is significantly less volatile than the market, meaning its downtrend is more gradual and less prone to sharp reversals, which may appeal to defensive investors but also implies limited upside participation in market rallies.
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
-9.8%
Cumulative gain past year
| Period | MCD Return | S&P 500 |
|---|---|---|
| 1m | +0.4% | +0.2% |
| 3m | -5.6% | +3.7% |
| 6m | -14.1% | +8.0% |
| 1y | -9.8% | +18.2% |
| ytd | -10.8% | +9.6% |
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MCD Fundamental Analysis
Revenue growth has been solid, with Q1 2026 revenue of $6.517 billion, up 9.44% year-over-year from $5.955 billion in Q1 2025. This marks an acceleration from the 7.2% YoY growth seen in Q4 2025 ($7.009 billion vs. $6.388 billion), driven by strong performance in the U.S. segment ($2.583 billion) and high-growth markets ($3.325 billion). The multi-quarter trend shows consistent expansion, with revenue rising from $5.955 billion in Q1 2025 to $6.843 billion in Q2 2025, $7.078 billion in Q3 2025, and $7.009 billion in Q4 2025, indicating a healthy growth trajectory despite macroeconomic headwinds. McDonald's is highly profitable, with Q1 2026 net income of $1.983 billion and a net margin of 30.4%. Gross margin has remained stable around 56-58% over the past year, with Q1 2026 at 55.9%, slightly below the 57.5% in Q4 2025, likely due to commodity cost pressures. Operating margin is robust at 44.3%, reflecting the company's efficient franchise model, though it has compressed from 47.4% in Q3 2025, indicating some margin pressure from higher costs. The balance sheet shows a debt-to-equity ratio of -30.6, which is negative due to negative shareholders' equity from share buybacks and accumulated losses, a common trait for mature companies with high leverage. However, free cash flow is strong at $1.73 billion in Q1 2026, and the trailing twelve-month free cash flow is $7.039 billion, providing ample coverage for dividends and debt service. The current ratio of 0.95 suggests tight liquidity, but the company's consistent cash generation mitigates near-term risk. ROE is negative (-478%) due to negative equity, but ROA of 13.6% indicates efficient asset utilization.
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?
Since net income is positive ($1.983 billion), the primary valuation metric is the P/E ratio. The trailing P/E is 25.47x, while the forward P/E is 18.75x, implying the market expects earnings growth to reduce the multiple. The gap between trailing and forward P/E suggests analysts anticipate a 26% earnings increase over the next year, which is optimistic given current headwinds. Compared to the industry average (not provided, but typically around 20-25x for restaurants), McDonald's trailing P/E of 25.47x appears in line with or slightly above the sector. However, the forward P/E of 18.75x suggests a discount to the industry average, potentially indicating undervaluation if growth materializes. The P/S ratio of 8.11x is elevated relative to historical norms, but this is common for high-margin franchise models. Historically, McDonald's trailing P/E has ranged from roughly 20x to 30x over the past five years, with the current 25.47x near the middle of that range. The forward P/E of 18.75x is near the lower end of its historical band, suggesting the market is pricing in a pessimistic earnings outlook. This could represent a value opportunity if the company can deliver on growth expectations, but it also reflects genuine risks from consumer spending slowdown and margin compression.
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 & Operational Risks: McDonald's carries a negative debt-to-equity ratio of -30.6 due to negative shareholders' equity from share buybacks, indicating high leverage. While free cash flow of $7.039 billion TTM provides coverage, the current ratio of 0.95 suggests tight liquidity. Margin pressure is evident, with gross margin declining to 55.9% in Q1 2026 from 57.5% in Q4 2025, and operating margin falling to 44.3% from 47.4% in Q3 2025, driven by rising commodity and labor costs. Revenue concentration in the U.S. (39% of systemwide sales) exposes the company to domestic economic cycles, though international diversification mitigates this.
Market & Competitive Risks: The stock's trailing P/E of 25.47x is above the industry average, leaving it vulnerable to multiple compression if earnings disappoint. With a beta of 0.418, McDonald's is less volatile than the market, but its relative strength versus the S&P 500 is deeply negative at -26.56%, indicating persistent underperformance. Competitive threats from value-focused chains like Wendy's and emerging players like Jersey Mike's could pressure market share. Regulatory risks include potential minimum wage hikes and health-focused labeling requirements. Recent news highlights rising gas prices as a headwind for consumer spending, which could impact same-store sales.
Worst-Case Scenario: A prolonged recession could further pressure consumer spending, leading to declining same-store sales and margin compression. If the company fails to manage costs and revenue growth decelerates below 5%, earnings could miss estimates, triggering analyst downgrades. In this scenario, the stock could fall to the analyst low target of $250.00, representing a 5.6% decline from the current price of $264.76. However, given the 52-week low of $260.96, the downside is limited to about 1.5% from current levels, but a break below that could accelerate losses toward $250, a potential 5.6% loss.
