Now trading at a price of $286.19, McDonald's has moved -1.3% so far today.
McDonald's returned gains of 9.0% last year, with its stock price reaching a high of $299.35 and a low of $245.73. Over the same period, the stock underperformed the S&P 500 index by -13.5%. As of April 2023, the company's 50-day average price was $269.17. 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 2.1% dividend yield over the last 12 months.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $21,258 | $21,364 | $19,208 | $23,223 | $23,183 | $25,014 |
| Revenue Growth | n/a | 0.5% | -10.09% | 20.9% | -0.17% | 7.9% |
| Operating Margins | 42% | 42% | 38% | 45% | 40% | 46% |
| Net Margins | 28% | 28% | 25% | 32% | 27% | 33% |
| Net Income (MM) | $5,924 | $6,025 | $4,730 | $7,545 | $6,177 | $8,333 |
| Net Interest Expense (MM) | $981 | $1,122 | $1,218 | $1,186 | $1,207 | $1,324 |
| Depreciation & Amort. (MM) | $1,482 | $1,618 | $1,751 | $1,868 | $1,871 | $1,944 |
| Earnings Per Share | $7.54 | $7.88 | $6.31 | $10.04 | $8.33 | $11.34 |
| EPS Growth | n/a | 4.51% | -19.92% | 59.11% | -17.03% | 36.13% |
| Diluted Shares (MM) | 786 | 765 | 750 | 752 | 741 | 714 |
| Free Cash Flow (MM) | $4,225 | $5,728 | $4,624 | $7,102 | $5,488 | $7,195 |
| Capital Expenditures (MM) | $2,742 | $2,394 | $1,641 | $2,040 | $1,899 | $2,129 |
| Current Ratio | 1.36 | 0.98 | 1.01 | 1.78 | 1.43 | 1.71 |
| Total Debt (MM) | $32,359 | $35,551 | $38,967 | $36,127 | $36,373 | $37,808 |
| Net Debt / EBITDA | 3.06 | 3.24 | 3.91 | 2.57 | 3.01 | 2.57 |
McDonald's has weak revenue growth and decreasing reinvestment in the business, irregular cash flows, and a highly leveraged balance sheet. On the other hand, the company benefits from decent operating margins with a stable trend and positive EPS growth.
McDonald's's Valuation Is in Line With Its Sector Averages:
McDonald's has a trailing twelve month P/E ratio of 23.7, compared to an average of 22.96 for the Consumer Discretionary sector. Based on its EPS guidance of $12.52, the company has a forward P/E ratio of 21.5. The 7.5% compound average growth rate of McDonald's's historical and projected earnings per share yields a PEG ratio of 3.16. This suggests that these shares are overvalued.
McDonald's Has an Average Rating of Buy:
The 34 analysts following McDonald's have set target prices ranging from $280.0 to $383.0 per share, for an average of $315.53 with a buy rating. As of April 2023, the company is trading -14.7% 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 1.1% of the company's shares are sold short. Institutions own 70.6% of the company's shares, and the insider ownership rate stands at 0.2%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $19,589,581,174.
