MCDONALD'S CORP (MCD) Stock Fundamental Analysis
NYSE:MCD - New York Stock Exchange, Inc. - US5801351017 - Common Stock - Currency: USD
Taking everything into account, MCD scores 6 out of 10 in our fundamental rating. MCD was compared to 131 industry peers in the Hotels, Restaurants & Leisure industry. While MCD has a great profitability rating, there are some minor concerns on its financial health. MCD is not valued too expensively and it also shows a decent growth rate. Finally MCD also has an excellent dividend rating. This makes MCD very considerable for dividend investing!
1. Profitability
1.1 Basic Checks
In the past year MCD was profitable.
In the past year MCD had a positive cash flow from operations.
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
The Return On Assets of MCD (14.49%) is better than 91.60% of its industry peers.
With an excellent Return On Invested Capital value of 18.02%, MCD belongs to the best of the industry, outperforming 90.08% of the companies in the same industry.
MCD had an Average Return On Invested Capital over the past 3 years of 18.38%. This is above the industry average of 13.91%.
| 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
With an excellent Profit Margin value of 31.75%, 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 Profit Margin of MCD has grown nicely.
The Operating Margin of MCD (45.86%) is better than 100.00% of its industry peers.
MCD's Operating Margin has improved in the last couple of years.
MCD has a Gross Margin of 56.83%. This is in the better half of the industry: MCD outperforms 69.47% of its industry peers.
In the last couple of years the Gross Margin of MCD has grown nicely.
| 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
MCD has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, MCD has less shares outstanding
The number of shares outstanding for MCD has been reduced compared to 5 years ago.
MCD has about the same debt/assets ratio as last year.
2.2 Solvency
MCD has an Altman-Z score of 4.96. This indicates that MCD is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.96, MCD belongs to the top of the industry, outperforming 87.02% 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.
Looking at the Debt to FCF ratio, with a value of 5.80, MCD is in the better half of the industry, outperforming 77.10% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 5.8 | ||
| Altman-Z | 4.96 |
ROIC/WACC2.05
WACC8.8%
2.3 Liquidity
A Current Ratio of 1.18 indicates that MCD should not have too much problems paying its short term obligations.
MCD's Current ratio of 1.18 is fine compared to the rest of the industry. MCD outperforms 61.83% 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 65.65% 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%.
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.
Looking at the last year, MCD shows a decrease in Revenue. The Revenue has decreased by -0.22% in the last year.
Measured over the past years, MCD shows a small growth in Revenue. The Revenue has been growing by 3.94% on average per year.
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
Based on estimates for the next years, MCD will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.03% on average per year.
MCD is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.81% yearly.
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
The Price/Earnings ratio is 25.28, which means the current valuation is very expensive for MCD.
Based on the Price/Earnings ratio, MCD is valued a bit cheaper than the industry average as 62.60% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 27.46, MCD is valued at the same level.
MCD is valuated rather expensively with a Price/Forward Earnings ratio of 22.09.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MCD is on the same level as its industry peers.
MCD is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 36.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.28 | ||
| Fwd PE | 22.09 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MCD indicates a slightly more expensive valuation: MCD is more expensive than 62.60% of the companies listed in the same industry.
MCD's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. MCD is cheaper than 61.83% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.53 | ||
| EV/EBITDA | 17.93 |
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)4.55
PEG (5Y)3.08
EPS Next 2Y6.85%
EPS Next 3Y7.45%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.36%, MCD has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.64, MCD pays a better dividend. On top of this MCD pays more dividend than 83.21% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, MCD has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.36% |
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 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
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%
295.74
-1.33 (-0.45%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners75.69%
Inst Owner Change-0.58%
Ins Owners0.2%
Ins Owner Change0.06%
Market Cap211.46B
Analysts72.86
Price Target340.3 (15.07%)
Short Float %1.18%
Short Ratio2.37
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.36% |
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)-0.91%
PT rev (3m)0.85%
EPS NQ rev (1m)-0.14%
EPS NQ rev (3m)0.67%
EPS NY rev (1m)-0.09%
EPS NY rev (3m)-0.46%
Revenue NQ rev (1m)0.1%
Revenue NQ rev (3m)0.73%
Revenue NY rev (1m)0.09%
Revenue NY rev (3m)-0.37%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.28 | ||
| Fwd PE | 22.09 | ||
| P/S | 8.23 | ||
| P/FCF | 31.53 | ||
| P/OCF | 22.29 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.93 |
EPS(TTM)11.7
EY3.96%
EPS(NY)13.39
Fwd EY4.53%
FCF(TTM)9.38
FCFY3.17%
OCF(TTM)13.27
OCFY4.49%
SpS35.95
BVpS-4.83
TBVpS-9.29
PEG (NY)4.55
PEG (5Y)3.08
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 | 4.96 |
F-Score5
WACC8.8%
ROIC/WACC2.05
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%