NYSE:MCD

Stock Analysis Report

Executive Summary

McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally.

Rewards

Trading at 5.9% below its fair value

Earnings are forecast to grow 4.68% per year

Earnings grew by 1.7% over the past year

Pays a high and reliable dividend of 3.12%

Risk Analysis

Has a high level of debt

Highly volatile share price over past 3 months

Significant insider selling over the past 3 months



Snowflake Analysis

Established dividend payer with proven track record.


Similar Companies

Share Price & News

How has McDonald's's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: MCD's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-2.2%

MCD

-15.2%

US Hospitality

-3.8%

US Market


1 Year Return

-15.9%

MCD

-52.8%

US Hospitality

-15.9%

US Market

Return vs Industry: MCD exceeded the US Hospitality industry which returned -52% over the past year.

Return vs Market: MCD matched the US Market which returned -15.1% over the past year.


Shareholder returns

MCDIndustryMarket
7 Day-2.2%-15.2%-3.8%
30 Day-19.4%-40.3%-17.4%
90 Day-20.8%-55.7%-24.1%
1 Year-13.9%-15.9%-51.5%-52.8%-14.1%-15.9%
3 Year32.7%23.4%-41.0%-45.0%10.0%2.8%
5 Year87.8%63.9%-38.0%-44.9%27.6%13.5%

Price Volatility Vs. Market

How volatile is McDonald's's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is McDonald's undervalued compared to its fair value and its price relative to the market?

6.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MCD ($160.33) is trading below our estimate of fair value ($170.33)

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


Price To Earnings Ratio

PE vs Industry: MCD is poor value based on its PE Ratio (20.2x) compared to the Hospitality industry average (11.5x).

PE vs Market: MCD is poor value based on its PE Ratio (20.2x) compared to the US market (12.4x).


Price to Earnings Growth Ratio

PEG Ratio: MCD is poor value based on its PEG Ratio (4.3x)


Price to Book Ratio

PB vs Industry: MCD has negative assets, so we can't compare its PB Ratio to the US Hospitality industry average.


Next Steps

Future Growth

How is McDonald's forecast to perform in the next 1 to 3 years based on estimates from 30 analysts?

4.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MCD's forecast earnings growth (4.7% per year) is above the savings rate (1.7%).

Earnings vs Market: MCD's earnings (4.7% per year) are forecast to grow slower than the US market (13.4% per year).

High Growth Earnings: MCD's earnings are forecast to grow, but not significantly.

Revenue vs Market: MCD's revenue (2.6% per year) is forecast to grow slower than the US market (7.1% per year).

High Growth Revenue: MCD's revenue (2.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if MCD's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has McDonald's performed over the past 5 years?

6.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MCD has high quality earnings.

Growing Profit Margin: MCD's current net profit margins (28.6%) are higher than last year (28.2%).


Past Earnings Growth Analysis

Earnings Trend: MCD's earnings have grown by 6.8% per year over the past 5 years.

Accelerating Growth: MCD's earnings growth over the past year (1.7%) is below its 5-year average (6.8% per year).

Earnings vs Industry: MCD earnings growth over the past year (1.7%) exceeded the Hospitality industry 1.6%.


Return on Equity

High ROE: MCD's liabilities exceed its assets, so it is difficult to calculate its Return on Equity.


Next Steps

Financial Health

How is McDonald's's financial position?


Financial Position Analysis

Short Term Liabilities: MCD has negative shareholder equity, which is a more serious situation than short term assets not covering short term liabilities.

Long Term Liabilities: MCD has negative shareholder equity, which is a more serious situation than short term assets not covering long term liabilities.


Debt to Equity History and Analysis

Debt Level: MCD has negative shareholder equity, which is a more serious situation than a high debt level.

Reducing Debt: MCD's has negative shareholder equity, so we do not need to check if its debt has reduced over time.

Debt Coverage: MCD's debt is well covered by operating cash flow (23.8%).

Interest Coverage: MCD's interest payments on its debt are well covered by EBIT (8.2x coverage).


Balance Sheet

Inventory Level: MCD has a high level of physical assets or inventory.

Debt Coverage by Assets: MCD has negative shareholder equity (liabilities exceed assets) therefore debt is not covered by short term assets.


Next Steps

Dividend

What is McDonald's's current dividend yield, its reliability and sustainability?

3.12%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: MCD's dividend (3.12%) is higher than the bottom 25% of dividend payers in the US market (2.05%).

High Dividend: MCD's dividend (3.12%) is low compared to the top 25% of dividend payers in the US market (5.71%).


Stability and Growth of Payments

Stable Dividend: MCD's dividends per share have been stable in the past 10 years.

Growing Dividend: MCD's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (59.5%), MCD's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MCD's dividends in 3 years are forecast to be covered by earnings (59.2% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.3yrs

Average management tenure


CEO

Chris Kempczinski (50yo)

0.42

Tenure

US$4,678,340

Compensation

Mr. Christopher J. Kempczinski, also known as Chris, is the President, CEO and Director at McDonald's Corporation since November 1, 2019. He served as President of USA at McDonald's Corporation since Janua ...


CEO Compensation Analysis

Compensation vs Market: Chris's total compensation ($USD4.68M) is below average for companies of similar size in the US market ($USD11.95M).

Compensation vs Earnings: Chris's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Christopher Kempczinski
President0.42yrUS$4.68m0.0012% $1.5m
Kevin Ozan
Corporate Executive VP & CFO5.08yrsUS$4.65m0.0033% $4.0m
Joseph Erlinger
President of McDonald's USA0.42yrUS$3.96m0.0011% $1.3m
Catherine Hoovel
Corporate VP & Chief Accounting Officer3.5yrsno data0.00029% $346.6k
Daniel Henry
Corporate Executive VP & Chief Information Officer2.5yrsno data0.000020% $23.9k
Mike Flores
Senior VP & Investor Relations Officerno datano datano data
Jerome Krulewitch
Corporate Executive VP3.08yrsno data0.00083% $992.0k
Silvia Lagnado
Corporate Executive VP & Global Chief Marketing Officer4.67yrsUS$3.97m0.0029% $3.4m
Radek Janalik
Managing Director of McDonald's Hungaryno datano datano data
Sarah Casanova
MD of Mcdonald’s Malaysia & Regional Manager of Mcdonald’s Singapore and Malaysia7.83yrsno datano data

3.3yrs

Average Tenure

52yo

Average Age

Experienced Management: MCD's management team is considered experienced (3.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Christopher Kempczinski
President0.42yrUS$4.68m0.0012% $1.5m
Richard Lenny
Independent Director14.58yrsUS$296.05k0.00031% $370.5k
Miles White
Independent Director11yrsUS$311.05k0.00067% $800.8k
Sheila Penrose
Independent Director13.92yrsUS$321.05k0.00040% $478.1k
Robert Eckert
Independent Director17.25yrsUS$321.05k0.00067% $800.8k
Andrew McKenna
Chairman Emeritus3.92yrsUS$156.45k0.0058% $6.9m
John Rogers
Independent Director17.25yrsUS$286.05k0.012% $14.2m
Enrique Hernandez
Non-Executive Chairman of the Board3.92yrsUS$777.28k0.00060% $717.1k
Mary Margaret Georgiadis
Independent Director5.25yrsUS$286.05k0.00029% $346.6k
John Mulligan
Independent Director4.67yrsUS$326.05k0.00039% $466.1k

8.1yrs

Average Tenure

63.5yo

Average Age

Experienced Board: MCD's board of directors are considered experienced (8.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: MCD insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

McDonald's Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: McDonald's Corporation
  • Ticker: MCD
  • Exchange: NYSE
  • Founded: 1940
  • Industry: Restaurants
  • Sector: Consumer Services
  • Market Cap: US$119.517b
  • Shares outstanding: 745.45m
  • Website: https://corporate.mcdonalds.com

Number of Employees


Location

  • McDonald's Corporation
  • 110 North Carpenter Street
  • Chicago
  • Illinois
  • 60607
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MCDNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
MCDSWX (SIX Swiss Exchange)YesCommon StockCHCHFJan 1968
MCD *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968
MDODB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
MDOXTRA (XETRA Trading Platform)YesCommon StockDEEURJan 1968
MCDBVC (Bolsa de Valores de Colombia)YesCommon StockCOCOPJan 1968
MCDSNSE (Santiago Stock Exchange)YesCommon StockCLUSDJan 1968
MD-UETLX (Eurotlx)YesCommon StockITEURJan 1968
MCDWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
MCDBASE (Buenos Aires Stock Exchange)CEDEAR (4 REP 1 USD0.01)ARARSJan 2000
MCDC34BOVESPA (Bolsa de Valores de Sao Paulo)BDR REPR 1/4 COM USD0.01BRBRLDec 2011

Biography

McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer various food products and beverages, as well as breakfast menu. As of December 31, 2019, the company operated 38,695 restaurants. McDonald's Corporation was founded in 1940 and is based in Chicago, Illinois. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/05 23:40
End of Day Share Price2020/04/03 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.