McDonald's Corporation
McDonald's Corporation Fundamental Analysis
McDonald's Corporation (MCD) shows moderate financial fundamentals with a PE ratio of 25.62, profit margin of 31.85%, and ROE of -3.37%. The company generates $26.9B in annual revenue with weak year-over-year growth of 1.67%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 25.8/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze MCD's fundamental strength across five key dimensions:
Efficiency Score
ExcellentMCD demonstrates superior asset utilization.
Valuation Score
WeakMCD trades at a premium to fair value.
Growth Score
WeakMCD faces weak or negative growth trends.
Financial Health Score
ModerateMCD shows balanced financial health with some risks.
Profitability Score
ModerateMCD maintains healthy but balanced margins.
Key Financial Metrics
Is MCD Expensive or Cheap?
P/E Ratio
MCD trades at 25.62 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, MCD's PEG of 14.37 indicates potential overvaluation.
Price to Book
The market values McDonald's Corporation at -122.55 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 11.28 times EBITDA. This signals the market has high growth expectations.
How Well Does MCD Make Money?
Net Profit Margin
For every $100 in sales, McDonald's Corporation keeps $31.85 as profit after all expenses.
Operating Margin
Core operations generate 46.10 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-3.37 in profit for every $100 of shareholder equity.
ROA
McDonald's Corporation generates $14.39 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
McDonald's Corporation generates strong operating cash flow of $10.54B, reflecting robust business health.
Free Cash Flow
McDonald's Corporation generates strong free cash flow of $7.18B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $10.06 in free cash annually.
FCF Yield
MCD converts 3.28% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
25.62
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
14.37
vs 25 benchmark
P/B Ratio
Price to book value ratio
-122.55
vs 25 benchmark
P/S Ratio
Price to sales ratio
8.15
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
-30.62
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.95
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-3.37
vs 25 benchmark
ROA
Return on assets percentage
0.14
vs 25 benchmark
ROCE
Return on capital employed
0.22
vs 25 benchmark
How MCD Stacks Against Its Sector Peers
| Metric | MCD Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 25.62 | 23.78 | Neutral |
| ROE | -336.89% | 1098.00% | Weak |
| Net Margin | 31.85% | -626.00% (disorted) | Strong |
| Debt/Equity | -30.62 | 0.86 | Strong (Low Leverage) |
| Current Ratio | 0.95 | 2.64 | Weak Liquidity |
| ROA | 14.39% | -8081.00% (disorted) | Strong |
MCD outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews McDonald's Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
28.05%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
44.03%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
22.76%
Industry Style: Cyclical, Growth, Discretionary
High Growth