What Are Analysts Saying About McDonald’s Corporation’s (NYSE:MCD) Future?

After McDonald’s Corporation’s (NYSE:MCD) earnings announcement in December 2017, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 14.96% in the upcoming year relative to the past 5-year average growth rate of -2.04%. Presently, with earnings at US$5.19B, we should see this growing to US$5.97B by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for McDonald’s in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here. See our latest analysis for McDonald’s

Exciting times ahead?

The longer term view from the 30 analysts covering MCD is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
NYSE:MCD Future Profit Mar 4th 18
NYSE:MCD Future Profit Mar 4th 18
From the current net income level of US$5.19B and the final forecast of US$6.58B by 2021, the annual rate of growth for MCD’s earnings is 8.21%. This leads to an EPS of $8.73 in the final year of projections relative to the current EPS of $6.43. Growth in earnings appears to be a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. Margins is currently sitting at 22.75%, which is expected to expand to 31.22% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For McDonald’s, there are three important aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is McDonald’s worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether McDonald’s is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of McDonald’s? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!