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 Rating5.3/10
Generated at:2026-06-03 17:40:54
Analysis based on 5 consecutive quarterly financial reports: 2026-03-31, 2025-12-31, 2025-09-30, 2025-06-30, 2025-03-31. Stock price data as of 2026-06-04. Valuation metrics use TTM and forward-looking data. Financial ratios calculated from the provided quarterly reports.
Overview

McDonald's Corporation demonstrates exceptional profitability with industry-leading margins and stable revenue growth, driven by its global brand and franchise-heavy model. However, its financial condition is overshadowed by extreme leverage with a debt-to-asset ratio exceeding 102%, resulting in negative shareholder equity. The stock trades at a premium valuation, with P/E and P/S multiples reflecting its quality but limiting near-term upside potential.

Valuation
4/10
Profitability
9/10
Financial health
3/10
Operation Advice
  • Maintain a Hold position.
  • The current price is near the bottom of its recent trading range and below the fundamental target price of approximately $299, suggesting limited immediate downside.
  • However, due to high leverage and premium valuation, significant upside is capped.
  • Existing shareholders can hold for defensive characteristics and reliable dividends, but should monitor debt levels closely.
  • New investors should wait for a more attractive entry point or signs of deleveraging before considering a Buy.

Valuation

P/E TTM
22.48
P/E LYR
27.32
P/B MRQ
-151.71
P/S TTM
--
AI Analysis
  • Valuation metrics indicate a premium pricing. The TTM P/E is 22.48 and forward P/E is 27.32, reflecting market premium for stable cash flows. The P/S ratio is 7.07, typical for high-margin companies. The P/B ratio is negative due to negative book value and is not useful. The current price is near the bottom of its recent trading range, and a fundamental target price based on a P/E of 25x TTM EPS is approximately $299.
  • The trailing twelve-month (TTM) P/E ratio is 22.48.
  • The forward-looking (Dynamic) P/E is 27.32.
  • These multiples are towards the higher end of the historical range for mature, defensive consumer stocks, reflecting the market's premium for its stable cash flows and brand strength.
  • The Price-to-Book (P/B) ratio is -151.71, which is a result of the negative book value and is not a useful metric for valuation.
  • The Price-to-Sales (TTM) ratio is 7.07, a high multiple typical for companies with very high net profit margins.
  • A PEG ratio cannot be reliably calculated, but given a P/E of ~25 and moderate single-digit earnings growth, it would likely be above 1, suggesting the stock is not cheap on a growth-adjusted basis.
  • Using TTM Diluted EPS of $11.95 and a P/E range of 22-28, a reasonable price range is $263 to $335.
  • The stock has recently traded between a low of $271.98 and a high of $330.49, with the current price ($273.29) near the bottom of this range.
  • A fundamental target price based on a P/E of 25x applied to TTM EPS of $11.95 is approximately $299, with a 12-month target range of $285 - $315.
Valuation trend

Profitability

ROE TTM
-383.85%
Net margin
30.43%
Gross margin
55.90%
Total revenue
6.52B
AI Analysis
  • McDonald's demonstrates exceptional and stable profitability with strong revenue growth, industry-leading margins, and efficient asset utilization. Revenue grew 9.42% year-over-year in Q1 2026, and net income grew 6.16%. Gross margin consistently exceeds 55%, and net profit margin exceeds 30%, characteristic of its franchise-heavy model.
  • Revenue growth has been positive in recent quarters, with Q1 2026 showing a 9.42% year-over-year increase to $6.52B.
  • Net income growth has also been consistent, with Q1 2026 up 6.16% to $1.98B.
  • The company maintains industry-leading margins.
  • The Gross Margin is consistently above 55%.
  • The Net Profit Margin is exceptionally high, exceeding 30% in all reported periods (Q1 2026: 30.43%).
  • This high net margin is characteristic of its franchise-heavy, asset-light business model.
  • The Return on Assets (ROA-TTM) of 14.90% is very strong, indicating efficient use of its asset base to generate profits.
  • The Return on Equity (ROE-TTM) of -383.85% is not meaningful due to the negative equity from the debt-heavy capital structure.
Profitability
2025Q12025Q22025Q32025Q42026Q1
ROE TTM---125.70%-214.73%-306.48%-383.85%
Earnings
2025Q12025Q22025Q32025Q42026Q1
Total revenue5.96B12.80B19.88B26.89B6.52B

Financial health

Debt/Asset
102.14%
Current ratio
1.14
Quick ratio
1.12
Cash ratio
1.12
AI Analysis
  • Financial health shows strength in liquidity and profitability but significant concern in solvency due to extreme leverage. The company maintains adequate short-term liquidity with a Current Ratio of 1.14 and Quick Ratio of 1.12. However, the Debt-to-Asset Ratio of 102.14% indicates liabilities exceed assets, resulting in negative shareholder equity and high financial risk.
  • The company maintains adequate short-term liquidity with a Current Ratio of 1.14 and a Quick Ratio of 1.12, indicating it can comfortably cover its short-term obligations.
  • A major red flag is the Debt-to-Asset Ratio of 102.14%.
  • This indicates that the company's total liabilities exceed its total assets, resulting in negative shareholder equity on the balance sheet.
  • This is a common structure for mature, cash-generative companies that return significant capital to shareholders via dividends and share buybacks, often financed with debt.
  • However, it significantly increases financial risk and leverage.
  • Despite the leveraged balance sheet, the company generates robust and growing profits and cash flows, as evidenced by consistent net income growth.
  • This cash flow is essential for servicing its high debt load.
Leverage
2025Q12025Q22025Q32025Q42026Q1
Debt/Asset106.13%104.63%103.57%103.01%102.14%
Liquidity
2025Q12025Q22025Q32025Q42026Q1
Current ratio1.181.301.000.951.14