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Both major geographic lines could outperform while FY2025 investment converts into incremental demand.
The risk test is capital spending at or above 12.52% of revenue in FY2030 without better revenue and operating cash.
Strong Buy. The $255.69 report-date price is below $345 Fair value and $487.79 Potential value. Unproductive capital spending is the main risk; broad segment growth is the clearest upside.3
Capital spending rose to $3.37 billion in FY2025. If it stays high without better sales and cash, investor returns and financial flexibility would weaken.35
FY2027 forecasts average $29.67 billion of revenue and $13.98 of diluted earnings per share. FY2025 operating cash flow was $10.55 billion.15
A favorable demand cycle would let both major geographic lines sustain mid-single-digit growth while capital spending produces incremental sales and cash.
Strong Buy because the valuation gap and cash generation outweigh the conditional capital-spending risk.4
A favorable demand cycle would let both major geographic lines sustain mid-single-digit growth while capital spending produces incremental sales and cash.
Strong Buy because the valuation gap and cash generation outweigh the conditional capital-spending risk.4
The Company has determined that it is the principal in these arrangements. The Company’s revenues consist of sales by Company-owned and operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. Fees vary by type of site, amount of Company investment, if any, and local business conditions. These fees, along with occupancy and operating rights, are stipulated in franchise/license agreements that generally have 20-year terms. McDonald's creates opportunities that encourage Company employees, franchisees and their employees, suppliers, and customers to get involved in philanthropic and volunteering opportunities.
The Company is guided by five core values that define who it is and how it runs the business across the three-legged stool of McDonald’s franchisees, suppliers, and employees:
The central stress is weaker demand while capital spending stays high. Sales, profit and cash would fall as the debt balance limits financial flexibility.
McDonald's reports revenue across International Operated Markets, the Usmarket, and its smaller licensed-markets-and-corporate line. Those figures show geographic breadth, but they do not establish switching costs, protected assets, network effects, cost advantage, or efficient scale; each structural factor remains unknown from the cited segment data.
SBUX is the closest restaurant-demand comparison. TJX represents value spending, while BKNG and ABNB represent travel-related discretionary spending; their different economics make them indirect checks rather than interchangeable peers.
FY2025 operating income was $12.39 billion, yet no structural moat source is credited from that result alone.5
The highlighted cell is Fair value when every assumption sits at its base level ($345.00). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $7.9B after modeled reinvestment of $2.5B, with terminal value at 73.4% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to , reinvestment, or resets materially.
Broad growth with steady margins would show that investment spending is producing demand and operating leverage.
Results near the forecast path would support the base case without proving the later growth runway.
Capital spending rose from $2.36 billion in FY2023 to $3.37 billion in FY2025. The industry references are 3.7% of revenue and 1.64 times depreciation.5
A favorable demand cycle would let both major geographic lines sustain mid-single-digit growth while capital spending produces incremental sales and cash.
A weaker demand cycle would pressure traffic and pricing. High spending would then absorb more cash while debt reduces flexibility.
The cycle view is demand-led and evidence-limited. Segment demand and capital productivity are the decisive tests.
Start smaller than the investor's usual full position. Add only while annual revenue growth stays at least 3%, margin remains above 43%, and capital spending produces better revenue and cash. The Strong Buy view has material upside, but long-run growth and capital-spending productivity still require verification.5
Keep position size tied to segment growth, margin and spending productivity. Do not rely on debt-funded repurchases as a lasting earnings driver.
The report-date price is below house Fair value, leaving meaningful upside if the base path holds.3
FY2025 operating cash and free cash flow support the earnings case despite elevated capital spending.45
Use a smaller staged allocation because spending normalization and the post-FY2027 runway remain conditional.15
Buy in stages while both major geographic lines support the growth path.
Cash generation and the valuation gap support the rating, while capital productivity remains the decisive qualification.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
The records this analysis drew on, as they stood when it was run.
Lower sales would weaken fixed-cost absorption, profit and cash. Debt would then reduce capital-allocation flexibility.
Weakness across both major geographic lines would reduce sales, fixed-cost absorption, earnings and cash generation.6
Persistent capital spending, leverage and weaker operating cash would reduce the present value of long-run cash flows.23
Investors would pay less for each dollar of future earnings unless post-FY2027 growth and reported-profit conversion remain durable.
Traffic weakness and heavier value promotions would reduce profit per sale and invalidate the high-margin growth path.5
The five developments that would weaken our investment case.
A broad segment slowdown would reduce consolidated sales, weaken fixed-cost absorption, and force lower earnings and free-cash-flow assumptions across valuation methods.
Current:FY2026 and FY2027 forecasts imply 4.92% and 5.2% growth.
Alert ifBelow 3% for two consecutive issuer fiscal years.
Persistent spending would leave less operating cash for investors, limit repurchases, and weaken the assumption that investment converts into durable growth.
Current:FY2025 capital spending was $3.37 billion in the annual filing retrieved 2026-09-08.
Traffic weakness or heavier value promotions would reduce profit per sale, making the mid-forties margin path and earnings leverage less credible.
Current:FY2025 operating margin was 46.1%.
Alert ifBelow 43% alongside weaker growth in either major geographic line.
Less cash from each dollar of reported profit would weaken dividend, investment and debt capacity while reducing trust in earnings-based valuation.
Current:FY2025 produced $1.23 of operating cash for each $1 of reported profit.
Alert if$0.80 or less for each $1 of reported profit in the latest trailing fiscal year.
A sustained financing-cost increase would lower the present value of long-run cash flows and intensify pressure from debt and continuing capital needs.
Current:6.8243% as of and retrieved 2026-09-08T21:14:02+00:00.
Alert ifAbove 8.8243% within 24 months.
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Project SBC-adjusted EPS, discount each year's earnings at cost of equity, then add a Gordon-growth terminal value.
Limitation: Terminal value is 73.7% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Limitation: Terminal value is 80.7% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
Solve for the growth rate that makes the model value equal the report-date share price.
This path supports steady earnings growth without further margin expansion. It fails if annual revenue growth stays below 3% for two consecutive fiscal years, or if capital spending does not lift revenue and operating cash.5
Joint segment strength would raise sales, profit and cash without requiring investors to pay a higher multiple. Margin compression would disconfirm this path.
FY2025 operating cash exceeded reported profit, and free cash flow remained positive. Elevated capital spending means less cash may remain for investors, so weaker operating cash alongside persistent spending would be the warning.45
Both lines must contribute for consolidated sales and fixed-cost absorption to improve.
Persistent spending would leave less cash for investors.5
A decline would weaken the quality of reported earnings and financial flexibility.
Further reductions would shorten visible growth support.1
| $23.22B |
| $23.18B |
| $25.49B |
| $25.92B |
| $26.89B |
| +3.7% |
| Gross profit | $12.58B | $13.21B | $14.56B | $14.71B | $15.44B | +5.2% |
| Operating income | $10.36B | $9.37B | $11.65B | $11.71B | $12.39B | +4.6% |
| Net income | $7.55B | $6.18B | $8.47B | $8.22B | $8.56B | +3.2% |
| EPS (diluted) | $10.04 | $8.33 | $11.56 | $11.39 | $11.95 | +4.5% |
| EBITDA | $12.18B | $10.90B | $13.86B | $13.95B | $14.64B | +4.7% |
| R&D | — | — | — | — | — | — |
| SG&A | $2.38B | $2.86B | $2.82B | $2.86B | $3.04B | +6.3% |
Free cash flow means cash left after capital spending. It remained $7.19 billion in FY2025 despite elevated investment, supporting distributions while leaving future spending productivity unresolved.45
Capital allocation must balance investment, shareholder distributions and $54.60 billion of debt. Future repurchases should not be treated as a permanent earnings-growth source.
Operating profit and cash generation are strong, but those outcomes alone do not establish a multi-year return-on-invested-capital direction.
Do not infer an economic-profit spread from operating margin alone. The enterprise discount rate was 6.8243% as of 2026-09-08.
FY2025 operating cash flow was $10.55 billion, and free cash flow was $7.19 billion.
The earnings case has cash support, provided capital spending does not become a permanent burden.
FY2025 capital spending reached $3.37 billion, while total debt was $54.60 billion on 2026-09-08.
Weak investment returns could reduce cash available for debt reduction and repurchases.
| Revenue | $26,885,000,000 |
|---|---|
| Cost of revenue | $11,450,000,000 |
| Gross profit | $15,435,000,000 |
| Operating expenses | $3,042,000,000 |
| Operating income | $12,393,000,000 |
| Non-operating items and tax | -$3,830,000,000 |
| Net income | $8,563,000,000 |
| Total assets | $59,515,000,000 |
|---|---|
| Cash | $774,000,000 |
| Current assets | $4,163,000,000 |
| Total liabilities | $61,306,000,000 |
| Current liabilities | $4,361,000,000 |
| Shareholder deficit | $1,791,000,000 |
| Net income | $8,563,000,000 |
|---|---|
| Operating inflow | $10,551,000,000 |
| Depreciation and amortization | $457,000,000 |
| Stock-based compensation | $165,000,000 |
| Other operating adjustments | $1,366,000,000 |
| Operating cash flow | $10,551,000,000 |
| Cash available | $11,722,000,000 |
| Beginning cash | $1,085,000,000 |
| Exchange-rate effect | $86,000,000 |
| Investing outflow | $3,822,000,000 |
| Capex | $3,365,000,000 |
| Other investing activities | $457,000,000 |
| Financing outflow | $7,125,000,000 |
| Ending cash | $774,000,000 |
| Investing cash flow | -$3,822,000,000 |
| Financing cash flow | -$7,125,000,000 |
Source: SEC EDGAR · Filed 2026-02-24 · SEC EDGAR
| Revenue by operating segment | Revenue | Share | YoY |
|---|---|---|---|
| International Operated Markets | $13.6B | 50.7% | 8% |
| USMarket | $10.8B | 40.3% | 1.8% |
| International Developmental Licensed Marketsand Corporate | $2.4B | 9% | -8.8% |
Point-in-time financial data used in the 2026-09-08 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-12-31 | $24.6B | $9.3B | $4.7B | $6.1B | $4.2B | $1.8B | $1.5B | $131.3M | $11.2B | $3.1B | — | -$981.6M | -$11.3B | — | $1.2B | $1.4B | $26B | 31.5% | — | 4.7% | — |
| 2017-12-31 | $22.8B | $10.9B | $5.2B | $5.6B | $3.7B | $1.9B | $1.4B | $117.5M | $4.7B | $3.1B | — | $562M | -$5.3B | $1.2B | $2.5B | $2.5B | $29.5B | 41.9% | — | 4.6% | — |
| 2018-12-31 | $21.3B | $10.3B | $5.9B | $7B | $4.2B | $2.7B | $214.8M | $125.1M | $5.2B | $3.3B | — | -$2.5B | -$5.9B | $2.5B | $866M | $1B | $31.1B | 41.5% | — | 4.8% | — |
| 2019-12-31 | $21.4B | $10.8B | $6B | $8.1B | $5.7B | $2.4B | $262.5M | $109.6M | $5B | $3.6B | — | -$3.1B | -$5B | $866M | $898.5M | $912.5M | $34.2B | 42.5% | — | 3.9% | — |
| 2020-12-31 | $19.2B | $9.1B | $4.7B | $6.3B | $4.6B | $1.6B | $300.6M | $92.4M | $907.8M | $3.8B | — | -$1.5B | -$2.2B | $898.5M | $3.4B | $4.7B | $37.4B | 38.1% | — | 3.8% | — |
| 2021-12-31 | $23.2B | $12.2B | $7.5B | $9.1B | $7.1B | $2B | $329.7M | $139.2M | $845.5M | $3.9B | — | -$2.2B | -$5.6B | $3.4B | $4.7B | $4.7B | $35.6B | 44.6% | — | 4.5% | — |
| 2022-12-31 | $23.2B | $10.9B | $6.2B | $7.4B | $5.5B | $1.9B | $370M | $167M | $3.9B | $4.2B | $1.2B | -$2.7B | -$6.6B | $4.7B | $2.6B | $2.6B | $35.9B | 40.4% | — | 6.7% | — |
| 2023-12-31 | $25.5B | $13.9B | $8.5B | $9.6B | $7.3B | $2.4B | $382M | $175M | $3.1B | $4.5B | $3B | -$3.2B | -$4.4B | $2.6B | $4.6B | $4.6B | $39.3B | 45.7% | — | 6.8% | — |
| 2024-12-31 | $25.9B | $13.9B | $8.2B | $9.4B | $6.7B | $2.8B | $447M | $172M | $2.8B | $4.9B | -$71M | -$5.3B | -$7.5B | $4.6B | $1.1B | $1.1B | $38.4B | 45.2% | — | 7.4% | — |
| 2025-12-31 | $26.9B | $14.6B | $8.6B | $10.6B | $7.2B | $3.4B | $457M | $165M | $2.1B | $5.1B | -$72M | -$3.8B | -$7.1B | $1.1B | $774M | $774M | $40B | 46.1% | — | 6.1% | — |
McDonald's Corporation (MCD) trades at 18.6x forward earnings against a peer median of 26.3x. Its EV/EBITDA of 15.7x compares with a peer median of 20.9x. The comparison uses 4 peers: The TJX Companies Inc., Booking Holdings Inc., Starbucks Corporation and Airbnb Inc., as of 2026-09-07 to 2026-09-08.
| Annual revenue growth remains at least 3%. | Initiate or add within the planned allocation. | Growth above this threshold keeps both major segments and the later revenue path credible. |
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Limitation: Terminal value is 73.4% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Value each distinct segment, subtract corporate overhead and net debt, add probability-weighted optionality, and divide by diluted shares.
| 4.9% |
| 5.2% |
| 4.6% |
| 4.4% |
| 4.2% |
| 4.0% |
| 3.9% |
| 3.8% |
| 3.7% |
| 3.6% |
| Operating margin | 46.1% | 46.0% | 45.9% | 45.8% | 45.7% | 45.6% | 45.5% | 45.5% | 45.5% | 45.5% |
| Operating income | $13.00B | $13.65B | $14.25B | $14.84B | $15.42B | $16.00B | $16.58B | $17.21B | $17.84B | $18.49B |
| Tax rate | 20.5% | 20.5% | 20.5% | 20.5% | 20.5% | 20.5% | 20.5% | 20.5% | 20.5% | 20.5% |
| NOPAT | $10.34B | $10.86B | $11.33B | $11.80B | $12.26B | $12.72B | $13.19B | $13.68B | $14.19B | $14.70B |
| Reinvestment | $2.46B | $1.96B | $1.39B | $773.29M | $100.04M | $429.27M | $782.28M | $1.16B | $1.57B | $2.00B |
| Reinvestment rate (of NOPAT) | 23.8% | 18.0% | 12.3% | 6.6% | 0.8% | 3.4% | 5.9% | 8.5% | 11.1% | 13.6% |
| Depreciation and amortization | $479.46M | $504.51M | $527.59M | $550.67M | $573.66M | $596.46M | $619.58M | $642.97M | $666.61M | $690.78M |
| Free cash flow to firm | $7.88B | $8.90B | $9.93B | $11.02B | $12.16B | $12.29B | $12.40B | $12.52B | $12.62B | $12.70B |
| International Operated Markets revenue | $14.30B | $15.05B | $15.74B | $16.43B | $17.11B | $17.79B | $18.48B | $19.18B | $19.89B | $20.61B |
| Usmarket revenue | $11.36B | $11.95B | $12.50B | $13.04B | $13.59B | $14.13B | $14.67B | $15.23B | $15.79B | $16.36B |
| International Developmental Licensed Marketsand Corporate revenue | $2.55B | $2.68B | $2.80B | $2.93B | $3.05B | $3.17B | $3.29B | $3.42B | $3.54B | $3.67B |
| Terminal growth | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% |
| Booking Holdings Inc. |
| 15.6x |
| 5.1x |
| 14.3x |
| — |
| 34.4% |
| SBUX | Starbucks Corporation | 33.5x | 3.1x | 24.4x | — | 12.9% |
| ABNB | Airbnb Inc. | 29.6x | 8.3x | 35.4x | 34.5% | 21.0% |
