McDonald's Corporation Fundamental Analysis
McDonald's Corporation (MCD) shows moderate financial fundamentals with a PE ratio of 23.24, profit margin of 31.62%, and ROE of -4.34%. The company generates $27.4B 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 52.1/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
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 23.24 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, MCD's PEG of 3.39 indicates potential overvaluation.
Price to Book
The market values McDonald's Corporation at -156.82 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 9.91 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 $31.62 as profit after all expenses.
Operating Margin
Core operations generate 46.01 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-4.34 in profit for every $100 of shareholder equity.
ROA
McDonald's Corporation generates $14.45 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 $10.53B, reflecting robust business health.
Free Cash Flow
McDonald's Corporation generates strong free cash flow of $7.04B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $9.90 in free cash annually.
FCF Yield
MCD converts 3.50% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
23.24
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
3.39
vs 25 benchmark
P/B Ratio
Price to book value ratio
-156.82
vs 25 benchmark
P/S Ratio
Price to sales ratio
7.35
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
-42.68
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.14
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-4.34
vs 25 benchmark
ROA
Return on assets percentage
0.14
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 | 23.24 | 23.66 | Neutral |
| ROE | -433.95% | 1193.00% | Weak |
| Net Margin | 31.62% | 2551.00% | Weak |
| Debt/Equity | -42.68 | 0.71 | Strong (Low Leverage) |
| Current Ratio | 1.14 | 2.83 | Neutral |
| ROA | 14.45% | -8432.00% (disorted) | Strong |
MCD outperforms its industry in 2 out of 6 key metrics, particularly excelling in ROA, 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