McDonald's Corporation Fundamental Analysis (NYSE: MCD)
McDonald's Corporation (NYSE: MCD) shows moderate financial fundamentals with a PE ratio of 21.93, profit margin of 31.72%, and ROE of -5.61%. The company generates $27.7B in annual revenue with moderate year-over-year growth of 3.72%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 31.6/100 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
ModerateMCD shows balanced valuation metrics.
Growth Score
WeakMCD faces weak or negative growth trends.
Financial Health Score
ExcellentMCD maintains a strong and stable balance sheet.
Profitability Score
ModerateMCD maintains healthy but balanced margins.
Key Financial Metrics
Is MCD Expensive or Cheap?
P/E Ratio
MCD trades at 21.93 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, MCD's PEG of 4.22 indicates potential overvaluation.
Price to Book
The market values McDonald's Corporation at -188.00 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 9.57 times EBITDA. This is generally considered low.
How Well Does MCD Make Money?
Net Profit Margin
For every $100 in sales, McDonald's Corporation keeps $31.72 as profit after all expenses.
Operating Margin
Core operations generate 45.97 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-5.61 in profit for every $100 of shareholder equity.
ROA
McDonald's Corporation generates $14.66 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 $11.34B, reflecting robust business health.
Free Cash Flow
McDonald's Corporation generates strong free cash flow of $7.76B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $10.92 in free cash annually.
FCF Yield
MCD converts 4.03% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
21.93
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
4.22
vs 25 benchmark
P/B Ratio
Price to book value ratio
-188.00
vs 25 benchmark
P/S Ratio
Price to sales ratio
6.94
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
-53.36
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.08
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-5.61
vs 25 benchmark
ROA
Return on assets percentage
0.15
vs 25 benchmark
ROCE
Return on capital employed
0.23
vs 25 benchmark
How MCD Stacks Against Its Sector Peers
| Metric | MCD Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 21.93 | 26.29 | Better (Cheaper) |
| ROE | -561.20% | 966.00% | Weak |
| Net Margin | 31.72% | -4927.00% (disorted) | Strong |
| Debt/Equity | -53.36 | 0.60 | Strong (Low Leverage) |
| Current Ratio | 1.08 | 2.32 | Neutral |
| ROA | 14.66% | 295.00% | Weak |
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
46.09%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
88.93%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
75.77%
Industry Style: Cyclical, Growth, Discretionary
High Growth