MCDONALD'S CORP (MCD) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:MCD - US5801351017 - Common Stock
311.925 USD
-1.02 (-0.33%)
Overall MCD gets a fundamental rating of 6 out of 10. We evaluated MCD against 132 industry peers in the Hotels, Restaurants & Leisure industry. MCD scores excellent on profitability, but there are some minor concerns on its financial health. While showing a medium growth rate, MCD is valued expensive at the moment. MCD also has an excellent dividend rating. With these ratings, MCD could be worth investigating further 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.
- Each year in the past 5 years MCD has been profitable.
- MCD had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- MCD has a better Return On Assets (13.88%) than 90.91% of its industry peers.
- MCD has a Return On Invested Capital of 17.77%. This is amongst the best in the industry. MCD outperforms 89.39% 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 10.36%.
| 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
- Looking at the Profit Margin, with a value of 32.04%, MCD belongs to the top of the industry, outperforming 97.73% of the companies in the same industry.
- In the last couple of years the Profit Margin of MCD has grown nicely.
- With an excellent Operating Margin value of 46.12%, MCD belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
- In the last couple of years the Operating Margin of MCD has grown nicely.
- MCD's Gross Margin of 57.43% is fine compared to the rest of the industry. MCD outperforms 72.73% of its industry peers.
- MCD's Gross Margin has improved in the last couple of years.
| 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.
- Compared to 1 year ago, MCD has less shares outstanding
- 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 4.83 indicates that MCD is not in any danger for bankruptcy at the moment.
- The Altman-Z score of MCD (4.83) is better than 88.64% of its industry peers.
- The Debt to FCF ratio of MCD is 5.60, which is a neutral value as it means it would take MCD, 5.60 years of fcf income to pay off all of its debts.
- MCD has a Debt to FCF ratio of 5.60. This is in the better half of the industry: MCD outperforms 74.24% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 5.6 | ||
| Altman-Z | 4.83 |
ROIC/WACC2.23
WACC7.97%
2.3 Liquidity
- MCD has a Current Ratio of 1.00. This is a normal value and indicates that MCD is financially healthy and should not expect problems in meeting its short term obligations.
- Looking at the Current ratio, with a value of 1.00, MCD is in line with its industry, outperforming 53.79% of the companies in the same industry.
- A Quick Ratio of 0.99 indicates that MCD may have some problems paying its short term obligations.
- With a Quick ratio value of 0.99, MCD perfoms like the industry average, outperforming 56.82% of the companies in the same industry.
| 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.
- Measured over the past years, MCD shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.20% on average per year.
- The Revenue has been growing slightly by 1.26% in the past year.
- 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
- The Earnings Per Share is expected to grow by 9.60% 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 5.51% on average per year.
EPS Next Y4.49%
EPS Next 2Y6.77%
EPS Next 3Y7.36%
EPS Next 5Y9.6%
Revenue Next Year2.58%
Revenue Next 2Y4.13%
Revenue Next 3Y4.46%
Revenue Next 5Y5.51%
3.3 Evolution
- The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
- 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
- The Price/Earnings ratio is 26.19, which means the current valuation is very expensive for MCD.
- 60.61% of the companies in the same industry are more expensive than MCD, based on the Price/Earnings ratio.
- The average S&P500 Price/Earnings ratio is at 27.25. MCD is around the same levels.
- MCD is valuated rather expensively with a Price/Forward Earnings ratio of 23.33.
- 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 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.19 | ||
| Fwd PE | 23.33 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, MCD is valued a bit more expensive than the industry average as 65.15% of the companies are valued more cheaply.
- MCD's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.12 | ||
| EV/EBITDA | 18.32 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The excellent profitability rating of MCD may justify a higher PE ratio.
PEG (NY)5.83
PEG (5Y)3.19
EPS Next 2Y6.77%
EPS Next 3Y7.36%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 2.43%, MCD has a reasonable but not impressive dividend return.
- MCD's Dividend Yield is rather good when compared to the industry average which is at 1.21. MCD pays more dividend than 82.58% of the companies in the same industry.
- MCD's Dividend Yield is a higher than the S&P500 average which is at 1.82.
| 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 paid a dividend for at least 10 years, which is 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.
- The dividend of MCD is growing, but earnings are growing more, so the dividend growth is sustainable.
DP60.13%
EPS Next 2Y6.77%
EPS Next 3Y7.36%
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 26.19 and the Price/Book (PB) ratio is -102.7.
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%.