MCDONALD'S CORP (MCD) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:MCD - US5801351017 - Common Stock
309.25 USD
+3.22 (+1.05%)
308.32 USD
-0.93 (-0.3%)
We assign a fundamental rating of 6 out of 10 to MCD. MCD was compared to 133 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. This makes MCD very considerable for dividend investing!
1. Profitability
1.1 Basic Checks
- MCD had positive earnings in the past year.
- In the past year MCD had a positive cash flow from operations.
- In the past 5 years MCD has always been profitable.
- Each year in the past 5 years MCD had a positive operating cash flow.
1.2 Ratios
- MCD has a better Return On Assets (13.88%) than 90.98% of its industry peers.
- MCD's Return On Invested Capital of 17.77% is amongst the best of the industry. MCD outperforms 89.47% of its industry peers.
- MCD had an Average Return On Invested Capital over the past 3 years of 18.38%. This is significantly above the industry average of 10.34%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.88% | ||
| ROE | N/A | ||
| ROIC | 17.77% |
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 32.04% is amongst the best of the industry. MCD outperforms 97.74% of its industry peers.
- MCD's Profit Margin has improved in the last couple of years.
- The Operating Margin of MCD (46.12%) is better than 100.00% of its industry peers.
- MCD's Operating Margin has improved in the last couple of years.
- Looking at the Gross Margin, with a value of 57.43%, MCD is in the better half of the industry, outperforming 72.18% of the companies in the same industry.
- In the last couple of years the Gross Margin of MCD has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 46.12% | ||
| PM (TTM) | 32.04% | ||
| GM | 57.43% |
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
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), MCD is creating value.
- The number of shares outstanding for MCD has been reduced compared to 1 year ago.
- Compared to 5 years ago, MCD has less shares outstanding
- Compared to 1 year ago, MCD has about the same debt to assets ratio.
2.2 Solvency
- An Altman-Z score of 4.78 indicates that MCD is not in any danger for bankruptcy at the moment.
- The Altman-Z score of MCD (4.78) is better than 88.72% of its industry peers.
- MCD has a debt to FCF ratio of 5.60. This is a neutral value as MCD would need 5.60 years to pay back of all of its debts.
- MCD has a better Debt to FCF ratio (5.60) than 74.44% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 5.6 | ||
| Altman-Z | 4.78 |
ROIC/WACC2.23
WACC7.97%
2.3 Liquidity
- A Current Ratio of 1.00 indicates that MCD should not have too much problems paying its short term obligations.
- With a Current ratio value of 1.00, MCD perfoms like the industry average, outperforming 54.14% of the companies in the same industry.
- MCD has a Quick Ratio of 1.00. This is a bad value and indicates that MCD is not financially healthy enough and could expect problems in meeting its short term obligations.
- MCD's Quick ratio of 0.99 is in line compared to the rest of the industry. MCD outperforms 57.14% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1 | ||
| Quick Ratio | 0.99 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 0.51% over the past year.
- The Earnings Per Share has been growing by 8.20% on average over the past years. This is quite good.
- MCD shows a small growth in Revenue. In the last year, the Revenue has grown by 1.26%.
- The Revenue has been growing slightly by 3.94% on average over the past years.
EPS 1Y (TTM)0.51%
EPS 3Y8.12%
EPS 5Y8.2%
EPS Q2Q%-0.31%
Revenue 1Y (TTM)1.26%
Revenue growth 3Y3.73%
Revenue growth 5Y3.94%
Sales Q2Q%2.98%
3.2 Future
- Based on estimates for the next years, MCD will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.60% on average per year.
- MCD is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.51% yearly.
EPS Next Y4.38%
EPS Next 2Y6.71%
EPS Next 3Y7.35%
EPS Next 5Y9.6%
Revenue Next Year2.58%
Revenue Next 2Y4.1%
Revenue Next 3Y4.44%
Revenue Next 5Y5.51%
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.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 25.97, MCD can be considered very expensive at the moment.
- 60.90% of the companies in the same industry are more expensive than MCD, based on the Price/Earnings ratio.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, MCD is valued at the same level.
- The Price/Forward Earnings ratio is 23.15, which indicates a rather expensive current valuation of MCD.
- MCD's Price/Forward Earnings is on the same level as the industry average.
- MCD is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 24.26, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.97 | ||
| Fwd PE | 23.15 |
4.2 Price Multiples
- MCD's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. MCD is more expensive than 63.91% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, MCD is valued a bit cheaper than the industry average as 62.41% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.87 | ||
| EV/EBITDA | 17.97 |
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)5.92
PEG (5Y)3.17
EPS Next 2Y6.71%
EPS Next 3Y7.35%
5. Dividend
5.1 Amount
- MCD has a Yearly Dividend Yield of 2.43%.
- Compared to an average industry Dividend Yield of 1.19, MCD pays a better dividend. On top of this MCD pays more dividend than 82.71% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, MCD pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.43% |
5.2 History
- The dividend of MCD is nicely growing with an annual growth rate of 7.43%!
- MCD has been paying a dividend for at least 10 years, so it has a reliable track record.
- MCD has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)7.43%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
- MCD pays out 60.13% of its income as dividend. This is not a sustainable payout ratio.
- MCD's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP60.13%
EPS Next 2Y6.71%
EPS Next 3Y7.35%
MCDONALD'S CORP / MCD FAQ
Can you provide the ChartMill fundamental rating for MCDONALD'S CORP?
ChartMill assigns a fundamental rating of 6 / 10 to MCD.
What is the valuation status for MCD stock?
ChartMill assigns a valuation rating of 3 / 10 to MCDONALD'S CORP (MCD). This can be considered as Overvalued.
How profitable is MCDONALD'S CORP (MCD) stock?
MCDONALD'S CORP (MCD) has a profitability rating of 8 / 10.
Can you provide the PE and PB ratios for MCD stock?
The Price/Earnings (PE) ratio for MCDONALD'S CORP (MCD) is 25.97 and the Price/Book (PB) ratio is -101.82.
Can you provide the dividend sustainability for MCD stock?
The dividend rating of MCDONALD'S CORP (MCD) is 7 / 10 and the dividend payout ratio is 60.13%.