MCDONALD'S CORP (MCD) Stock Fundamental Analysis
NYSE:MCD - New York Stock Exchange, Inc. - US5801351017 - Common Stock - Currency: USD
Overall MCD gets a fundamental rating of 6 out of 10. We evaluated MCD against 135 industry peers in the Hotels, Restaurants & Leisure industry. While MCD belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. MCD is quite expensive at the moment. It does show a decent growth rate. MCD also has an excellent dividend rating. These ratings would make MCD suitable for dividend investing!
1. Profitability
1.1 Basic Checks
MCD had positive earnings in the past year.
MCD had a positive operating cash flow in the past year.
In the past 5 years MCD has always been profitable.
MCD had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 14.49%, MCD belongs to the best of the industry, outperforming 91.85% of the companies in the same industry.
MCD has a Return On Invested Capital of 18.02%. This is amongst the best in the industry. MCD outperforms 90.37% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MCD is above the industry average of 13.81%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.49% | ||
| ROE | N/A | ||
| ROIC | 18.02% |
ROA(3y)14.08%
ROA(5y)13.05%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)18.38%
ROIC(5y)16.68%
1.3 Margins
MCD's Profit Margin of 31.75% is amongst the best of the industry. MCD outperforms 100.00% of its industry peers.
MCD's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 45.86%, MCD belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
MCD's Operating Margin has improved in the last couple of years.
MCD's Gross Margin of 56.83% is fine compared to the rest of the industry. MCD outperforms 68.15% of its industry peers.
MCD's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 45.86% | ||
| PM (TTM) | 31.75% | ||
| GM | 56.83% |
OM growth 3Y2.46%
OM growth 5Y1.77%
PM growth 3Y-0.79%
PM growth 5Y2.38%
GM growth 3Y1.56%
GM growth 5Y1.64%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MCD is creating value.
MCD has less shares outstanding than it did 1 year ago.
MCD has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, MCD has about the same debt to assets ratio.
2.2 Solvency
MCD has an Altman-Z score of 4.99. This indicates that MCD is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 4.99, MCD belongs to the best of the industry, outperforming 87.41% of the companies in the same industry.
MCD has a debt to FCF ratio of 5.80. This is a neutral value as MCD would need 5.80 years to pay back of all of its debts.
MCD's Debt to FCF ratio of 5.80 is fine compared to the rest of the industry. MCD outperforms 77.04% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 5.8 | ||
| Altman-Z | 4.99 |
ROIC/WACC2.06
WACC8.76%
2.3 Liquidity
MCD has a Current Ratio of 1.18. This is a normal value and indicates that MCD is financially healthy and should not expect problems in meeting its short term obligations.
MCD has a better Current ratio (1.18) than 61.48% of its industry peers.
MCD has a Quick Ratio of 1.17. This is a normal value and indicates that MCD is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of MCD (1.17) is better than 65.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.18 | ||
| Quick Ratio | 1.17 |
3. Growth
3.1 Past
MCD shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.58%.
The Earnings Per Share has been growing by 8.20% on average over the past years. This is quite good.
MCD shows a decrease in Revenue. In the last year, the revenue decreased by -0.22%.
The Revenue has been growing slightly by 3.94% on average over the past years.
EPS 1Y (TTM)-2.58%
EPS 3Y8.12%
EPS 5Y8.2%
EPS Q2Q%-1.11%
Revenue 1Y (TTM)-0.22%
Revenue growth 3Y3.73%
Revenue growth 5Y3.94%
Sales Q2Q%-3.45%
3.2 Future
The Earnings Per Share is expected to grow by 9.03% on average over the next years. This is quite good.
Based on estimates for the next years, MCD will show a small growth in Revenue. The Revenue will grow by 4.81% on average per year.
EPS Next Y5.56%
EPS Next 2Y6.85%
EPS Next 3Y7.45%
EPS Next 5Y9.03%
Revenue Next Year1.54%
Revenue Next 2Y3.46%
Revenue Next 3Y4.23%
Revenue Next 5Y4.81%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 25.63 indicates a quite expensive valuation of MCD.
MCD's Price/Earnings ratio is a bit cheaper when compared to the industry. MCD is cheaper than 61.48% of the companies in the same industry.
When comparing the Price/Earnings ratio of MCD to the average of the S&P500 Index (27.30), we can say MCD is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 22.40, the valuation of MCD can be described as rather expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MCD is on the same level as its industry peers.
The average S&P500 Price/Forward Earnings ratio is at 21.76. MCD is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.63 | ||
| Fwd PE | 22.4 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MCD is valued a bit more expensive than 62.22% of the companies in the same industry.
61.48% of the companies in the same industry are more expensive than MCD, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.98 | ||
| EV/EBITDA | 18.15 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates MCD does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of MCD may justify a higher PE ratio.
PEG (NY)4.61
PEG (5Y)3.13
EPS Next 2Y6.85%
EPS Next 3Y7.45%
5. Dividend
5.1 Amount
MCD has a Yearly Dividend Yield of 2.37%. Purely for dividend investing, there may be better candidates out there.
MCD's Dividend Yield is rather good when compared to the industry average which is at 3.53. MCD pays more dividend than 82.96% of the companies in the same industry.
MCD's Dividend Yield is comparable with the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.37% |
5.2 History
On average, the dividend of MCD grows each year by 7.43%, which is quite nice.
MCD has been paying a dividend for at least 10 years, so it has a reliable track record.
MCD has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)7.43%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
60.41% of the earnings are spent on dividend by MCD. This is not a sustainable payout ratio.
The dividend of MCD is growing, but earnings are growing more, so the dividend growth is sustainable.
DP60.41%
EPS Next 2Y6.85%
EPS Next 3Y7.45%
299.91
+1.52 (+0.51%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners75.69%
Inst Owner Change0%
Ins Owners0.2%
Ins Owner Change0.06%
Market Cap214.44B
Analysts72.86
Price Target340.09 (13.4%)
Short Float %1.09%
Short Ratio2.28
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.37% |
Yearly Dividend6.77
Dividend Growth(5Y)7.43%
DP60.41%
Div Incr Years34
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.83%
Min EPS beat(2)-1.13%
Max EPS beat(2)-0.53%
EPS beat(4)0
Avg EPS beat(4)-1.51%
Min EPS beat(4)-4.24%
Max EPS beat(4)-0.14%
EPS beat(8)3
Avg EPS beat(8)1.71%
EPS beat(12)7
Avg EPS beat(12)2.92%
EPS beat(16)10
Avg EPS beat(16)3.5%
Revenue beat(2)0
Avg Revenue beat(2)-2.52%
Min Revenue beat(2)-3.22%
Max Revenue beat(2)-1.83%
Revenue beat(4)0
Avg Revenue beat(4)-2.01%
Min Revenue beat(4)-3.22%
Max Revenue beat(4)-0.22%
Revenue beat(8)2
Avg Revenue beat(8)-0.89%
Revenue beat(12)5
Avg Revenue beat(12)0.04%
Revenue beat(16)8
Avg Revenue beat(16)0.33%
PT rev (1m)-0.97%
PT rev (3m)0.79%
EPS NQ rev (1m)-0.14%
EPS NQ rev (3m)0.67%
EPS NY rev (1m)-0.24%
EPS NY rev (3m)-0.56%
Revenue NQ rev (1m)0.1%
Revenue NQ rev (3m)0.73%
Revenue NY rev (1m)0.15%
Revenue NY rev (3m)-0.37%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.63 | ||
| Fwd PE | 22.4 | ||
| P/S | 8.34 | ||
| P/FCF | 31.98 | ||
| P/OCF | 22.61 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.15 |
EPS(TTM)11.7
EY3.9%
EPS(NY)13.39
Fwd EY4.46%
FCF(TTM)9.38
FCFY3.13%
OCF(TTM)13.27
OCFY4.42%
SpS35.95
BVpS-4.83
TBVpS-9.29
PEG (NY)4.61
PEG (5Y)3.13
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.49% | ||
| ROE | N/A | ||
| ROCE | 22.53% | ||
| ROIC | 18.02% | ||
| ROICexc | 18.46% | ||
| ROICexgc | 19.69% | ||
| OM | 45.86% | ||
| PM (TTM) | 31.75% | ||
| GM | 56.83% | ||
| FCFM | 26.09% |
ROA(3y)14.08%
ROA(5y)13.05%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)18.38%
ROIC(5y)16.68%
ROICexc(3y)19.5%
ROICexc(5y)17.88%
ROICexgc(3y)21.29%
ROICexgc(5y)19.5%
ROCE(3y)23.04%
ROCE(5y)20.89%
ROICexcg growth 3Y2.6%
ROICexcg growth 5Y2.93%
ROICexc growth 3Y2.55%
ROICexc growth 5Y2.53%
OM growth 3Y2.46%
OM growth 5Y1.77%
PM growth 3Y-0.79%
PM growth 5Y2.38%
GM growth 3Y1.56%
GM growth 5Y1.64%
F-Score5
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 5.8 | ||
| Debt/EBITDA | 2.8 | ||
| Cap/Depr | 131.89% | ||
| Cap/Sales | 10.81% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 68.26% | ||
| Profit Quality | 82.17% | ||
| Current Ratio | 1.18 | ||
| Quick Ratio | 1.17 | ||
| Altman-Z | 4.99 |
F-Score5
WACC8.76%
ROIC/WACC2.06
Cap/Depr(3y)117.68%
Cap/Depr(5y)111.18%
Cap/Sales(3y)9.38%
Cap/Sales(5y)9.09%
Profit Quality(3y)85.22%
Profit Quality(5y)89.5%
High Growth Momentum
Growth
EPS 1Y (TTM)-2.58%
EPS 3Y8.12%
EPS 5Y8.2%
EPS Q2Q%-1.11%
EPS Next Y5.56%
EPS Next 2Y6.85%
EPS Next 3Y7.45%
EPS Next 5Y9.03%
Revenue 1Y (TTM)-0.22%
Revenue growth 3Y3.73%
Revenue growth 5Y3.94%
Sales Q2Q%-3.45%
Revenue Next Year1.54%
Revenue Next 2Y3.46%
Revenue Next 3Y4.23%
Revenue Next 5Y4.81%
EBIT growth 1Y-0.13%
EBIT growth 3Y6.28%
EBIT growth 5Y5.78%
EBIT Next Year21.21%
EBIT Next 3Y11.52%
EBIT Next 5Y9.83%
FCF growth 1Y18.21%
FCF growth 3Y-2.05%
FCF growth 5Y3.1%
OCF growth 1Y23.6%
OCF growth 3Y1.11%
OCF growth 5Y3.07%