McDonald's returned gains of 13.0% last year, with its stock price reaching a high of $284.98 and a low of $228.34. Over the same period, the stock outperformed the S&P 500 index by 20.0%. More recently, the company's 50-day average price was $269.09. McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Based in Chicago, IL, the large-cap Consumer Discretionary company has 100,000 full time employees. McDonald's has offered a 2.0% dividend yield over the last 12 months.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue | $21,076,500 | $19,207,800 | $23,222,900 | $23,182,600 |
| Gross Margins | 52.7% | 50.8% | 54.2% | 57.0% |
| Operating Margins | 42.2% | 37.5% | 42.5% | 44.6% |
| Net Income | $6,025,400 | $4,730,500 | $7,545,200 | $6,177,400 |
| Net Margins | 28.59% | 24.63% | 32.49% | 26.65% |
| Earnings Per Share | $7.88 | $6.31 | $10.04 | $8.32 |
| Diluted Shares | 764,900 | 750,100 | 751,800 | 731,497 |
| Free Cash Flow | $5,728,400 | $4,624,400 | $7,101,500 | $5,487,500 |
| Capital Expenditures | -$2,393,700 | -$1,640,800 | -$2,040,000 | -$1,899,200 |
| Net Current Assets | -$52,163,200 | -$54,208,500 | -$51,306,800 | -$51,014,800 |
| Current Ratio | 0.98 | 1.01 | 1.78 | 1.43 |
| Long Term Debt | $34,118,100 | $35,196,800 | $35,622,700 | $35,903,500 |
| Net Debt / EBITDA | 3.12 | 3.73 | 2.59 | 2.81 |
McDonald's Has Elevated P/B and P/E Ratios:
McDonald's has a trailing twelve month P/E ratio of 32.3, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $11.7, the company has a forward P/E ratio of 23.0. The 10.4% compound average growth rate of McDonald's historical and projected earnings per share yields a PEG ratio of 3.11. This suggests that these shares are overvalued.
Analysts Give McDonald's an Average Rating of Buy:
The 32 analysts following McDonald's have set target prices ranging from $270.0 to $330.0 per share, for an average of $295.84 with a buy rating. As of April 2023, the company is trading -9.0% away from its average target price, indicating that there is an analyst consensus of some upside potential.
McDonald's has a very low short interest because 0.9% of the company's shares are sold short. Institutions own 70.6% of the company's shares, and the insider ownership rate stands at 0.17%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 9% stake in the company is worth $19,297,810,372.
