McDonald's Corporation(MCD) - Stock detail

McDonald's Corporation

US
MCD
McDonald's Corporation(Listing date: 04/21/1965)

McDonald's Corporation is a company registered in Delaware. The company franchises and operates McDonald's restaurants, which offer locally relevant menus of quality food and beverages in communities across more than 100 countries. The company is primarily a franchisor and believes that franchising is crucial for delivering great-tasting food, locally relevant customer experiences, and driving profitability. Franchising enables individuals to become their own employers and maintain control over all employment-related matters, marketing, and pricing decisions, while also benefiting from the strength of McDonald's global brand, operating system, and financial resources. The company's revenues include sales from company-operated restaurants as well as fees from franchised restaurants operated by traditional franchisees, developmental licensees, and affiliates.

AI Value AnalystHold
Overall Rating4.7/10
Generated at:2026-03-04 16:37:07
Analysis based on 5 financial reports from 2025-03-31 to 2025-12-31, including annual and quarterly reports. Data sources include company financial statements and market trading data. Cash flow data was not provided in the analysis but historical patterns were referenced.
Overview

McDonald's Corporation is a global leader in the quick-service restaurant industry with strong brand equity and extensive global footprint. The company demonstrates consistent profitability with robust margins and revenue growth, but faces challenges with high leverage and potential liquidity constraints. Current valuation appears fair but not cheap, trading near the upper end of its recent range.

Valuation
3/10
Profitability
7/10
Financial health
4/10
Operation Advice
  • Existing holders should maintain positions; new investors should consider scaling in on dips to $300-$320 for better risk/reward.
  • Target price ranges: Base case $340-$360, Bull case $370-$385, Bear case $300-$315.

Valuation

P/E TTM
27.78
P/E LYR
27.32
P/B MRQ
-132.81
P/S TTM
--
AI Analysis
  • McDonald's current PE ratios of 27-28 are above market average, suggesting modest overvaluation relative to earnings, though justified by defensive qualities and stable cash flows. PB ratio is not meaningful due to negative book value, while PS ratio of 8.77 is reasonable for a premium brand.
  • Dynamic PE of 27.32 and TTM PE of 27.78 are above the market average (~20-25), suggesting the stock may be modestly overvalued relative to earnings
  • PB Ratio of -132.81 is not meaningful due to negative book value and should not be used as a primary valuation metric
  • TTM PS ratio of 8.77 is high but reasonable for a premium brand with high margins
  • Recent trading data shows a range from $299.62 to $341.35, with current price near the upper end
  • Historical analysis indicates a 63.64% win rate but only 27.27% target hit rate, suggesting price advances are often modest and require patience
  • Base case target price range of $340-$360 based on EPS growth of ~5% and forward PE of 28-30
  • Bull case target of $370-$385 if margin expansion accelerates or same-store sales outperform
  • Bear case target of $300-$315 if economic slowdown impacts consumer spending or interest rates rise sharply
Valuation trend

Profitability

ROE TTM
-306.48%
Net margin
31.85%
Gross margin
57.41%
Total revenue
26.89B
AI Analysis
  • McDonald's demonstrates consistent profitability with revenue growth of 3.72%, EPS growth of 4.92%, and strong margins including 57.41% gross margin and 31.85% net margin. ROA of 14.93% is strong, though ROE is distorted by capital structure.
  • Revenue increased from $25.92B (2024) to $26.89B (2025), a 3.72% growth, showing resilience despite economic headwinds
  • Diluted EPS rose from $11.39 (2024) to $11.95 (2025), a 4.92% increase, reflecting efficient cost management and operational leverage
  • Gross margin improved to 57.41% (2025) from 56.75% (2024)
  • Net margin of 31.85% is strong for the industry, indicating pricing power and cost control
  • ROA of 14.93% is strong
  • ROE of -306.48% is anomalous and likely distorted by shareholder equity being negative or near-zero due to high debt levels and share repurchases
Profitability
2024Q42025Q12025Q22025Q32025Q4
ROE TTM---51.52%-125.70%-214.73%-306.48%
Earnings
2024Q42025Q12025Q22025Q32025Q4
Total revenue25.92B5.96B12.80B19.88B26.89B

Financial health

Debt/Asset
103.01%
Current ratio
0.95
Quick ratio
--
Cash ratio
0.95
AI Analysis
  • McDonald's exhibits mixed financial health with potential liquidity constraints (current ratio 0.95) and concerning leverage (debt-to-asset ratio 103.01%), though profitability remains robust with revenue growth of 3.72% and net income growth of 4.13%.
  • Current ratio of 0.95 indicates potential liquidity constraints, as it is below 1.0, suggesting challenges in covering short-term obligations with short-term assets
  • Debt-to-asset ratio of 103.01% is concerning, indicating that total liabilities exceed total assets
  • This high leverage is atypical and may reflect accounting treatments specific to the company's franchise model impacts
  • Despite leverage concerns, profitability remains robust with revenue growth of 3.72% year-over-year
  • Net income grew 4.13% year-over-year
  • Net margin of 31.85% is strong for the industry
  • Historically, McDonald's generates substantial cash flows from operations, supporting dividend payments and share buybacks
Leverage
2024Q42025Q12025Q22025Q32025Q4
Debt/Asset106.88%106.13%104.63%103.57%103.01%
Liquidity
2024Q42025Q12025Q22025Q32025Q4
Current ratio1.191.181.301.000.95