McDonald's Valuation

Is MCD undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Below Fair Value
Significantly Below Fair Value
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of MCD when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MCD ($290.91) is trading below our estimate of fair value ($318.28)

Significantly Below Fair Value: MCD is trading below fair value, but not by a significant amount.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MCD?

Key metric: As MCD is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for MCD. This is calculated by dividing MCD's market cap by their current earnings.
What is MCD's PE Ratio?
PE Ratio	25.3x
Earnings	US$8.25b
Market Cap	US$208.34b

MCD key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	10x
Enterprise Value/EBITDA	18.8x
PEG Ratio	3.8x

Price to Earnings Ratio vs Peers

How does MCD's PE Ratio compare to its peers?

The above table shows the PE ratio for MCD vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	Forward PE	Estimated Growth	Market Cap
Peer Average	31.4x
SBUX Starbucks	29.6x	10.5%	US$111.5b
CMG Chipotle Mexican Grill	54.1x	15.5%	US$80.1b
YUM Yum! Brands	24.3x	8.0%	US$36.9b
QSR Restaurant Brands International	17.7x	10.9%	US$31.3b
MCD McDonald's	25.3x	6.6%	US$208.3b

Price-To-Earnings vs Peers: MCD is good value based on its Price-To-Earnings Ratio (25.3x) compared to the peer average (31.4x).

Price to Earnings Ratio vs Industry

How does MCD's PE Ratio compare vs other companies in the US Hospitality Industry?

2 Companies	Price / Earnings	Estimated Growth	Market Cap
GDHG Golden Heaven Group Holdings	3.5x	n/a	US$6.01m
THRS.F Agility Real Estate	1.7x	n/a	US$2.05m

No more companies available in this PE range

2 Companies		Estimated Growth	Market Cap

No more companies

Price-To-Earnings vs Industry: MCD is expensive based on its Price-To-Earnings Ratio (25.3x) compared to the US Hospitality industry average (24.4x).

Price to Earnings Ratio vs Fair Ratio

What is MCD's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MCD PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	25.3x
Fair PE Ratio	32.7x

Price-To-Earnings vs Fair Ratio: MCD is good value based on its Price-To-Earnings Ratio (25.3x) compared to the estimated Fair Price-To-Earnings Ratio (32.7x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst MCD forecast and predictions for the stock price in 12 month’s time.
Date	Share Price	Average 1Y Price Target	Dispersion	High	Low	1Y Actual price	Analysts
Current	US$290.91	US$321.51 +10.5%	6.6%	US$360.00	US$280.00	n/a	32
Nov ’25	US$295.21	US$321.04 +8.7%	6.6%	US$360.00	US$280.00	n/a	32
Oct ’25	US$302.98	US$302.44 -0.2%	7.1%	US$360.00	US$257.00	n/a	32
Sep ’25	US$288.66	US$295.85 +2.5%	6.4%	US$342.00	US$257.00	n/a	31
Aug ’25	US$268.75	US$294.87 +9.7%	6.3%	US$342.00	US$257.00	n/a	31
Jul ’25	US$249.99	US$310.13 +24.1%	5.7%	US$357.00	US$285.00	n/a	31
Jun ’25	US$258.89	US$312.13 +20.6%	6.3%	US$357.00	US$285.00	n/a	30
May ’25	US$274.43	US$316.05 +15.2%	6.2%	US$357.00	US$285.00	n/a	31
Apr ’25	US$280.22	US$325.72 +16.2%	4.7%	US$357.00	US$290.00	n/a	31
Mar ’25	US$290.73	US$326.26 +12.2%	4.5%	US$357.00	US$299.00	n/a	32
Feb ’25	US$298.08	US$323.33 +8.5%	6.4%	US$383.00	US$280.00	n/a	33
Jan ’25	US$296.51	US$315.59 +6.4%	6.3%	US$383.00	US$280.00	n/a	34
Dec ’24	US$285.96	US$308.33 +7.8%	7.2%	US$383.00	US$270.00	n/a	33
Nov ’24	US$261.97	US$307.72 +17.5%	7.4%	US$383.00	US$270.00	US$295.21	33
Oct ’24	US$263.44	US$328.59 +24.7%	5.3%	US$383.00	US$285.00	US$302.98	32
Sep ’24	US$280.94	US$327.97 +16.7%	5.1%	US$383.00	US$285.00	US$288.66	32
Aug ’24	US$291.07	US$327.26 +12.4%	5.4%	US$383.00	US$285.00	US$268.75	33
Jul ’24	US$298.41	US$316.05 +5.9%	5.0%	US$346.00	US$260.00	US$249.99	33
Jun ’24	US$287.87	US$316.30 +9.9%	5.0%	US$346.00	US$260.00	US$258.89	32
May ’24	US$297.58	US$314.20 +5.6%	5.4%	US$346.00	US$260.00	US$274.43	33
Apr ’24	US$279.61	US$293.27 +4.9%	6.0%	US$330.00	US$240.00	US$280.22	32
Mar ’24	US$262.72	US$292.20 +11.2%	5.8%	US$328.00	US$240.00	US$290.73	33
Feb ’24	US$266.27	US$292.63 +9.9%	5.9%	US$328.00	US$240.00	US$298.08	32
Jan ’24	US$263.53	US$289.55 +9.9%	6.3%	US$328.00	US$247.00	US$296.51	33
Dec ’23	US$273.40	US$288.53 +5.5%	6.2%	US$328.00	US$247.00	US$285.96	34
Nov ’23	US$272.95	US$287.59 +5.4%	6.2%	US$328.00	US$247.00	US$261.97	34

Analyst Forecast: Target price is less than 20% higher than the current share price.