MCDONALDS CORP (MCD) Stock Analysis
MCDONALDS CORP (MCD) Stock Analysis
Analysis from 10-Q filed 2025-11-05. Data as of Q4 2025.
Overall Grade: F (Concerning)
MCDONALDS CORP faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 22.1% | Above industry average |
| FCF Margin | 26.7% | Strong cash generation |
| Debt/Equity | -23.2x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 22.1% suggests durable competitive advantages and efficient capital allocation.
Explore MCDONALDS CORP: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: MCDONALDS CORP earns 22.1% ROIC, Top 25% in Consumer Discretionary
MCDONALDS CORP's trailing-twelve-month ROIC of 22.1% ranks Top 25% in Consumer Discretionary companies (sector median: 8.8%), driven by NOPAT margin of 36.2% combined with asset turnover of 0.5x. Source: 10-Q filed 2025-11-05.
| Metric | MCD | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 22.1% | Excellent | Above sector median of 8.8% |
| Return on Equity (ROE) | -306.6% | Red flag | Moderate equity returns |
| Operating Margin | 46.1% | Excellent | Efficient operations |
Cash Flow: MCDONALDS CORP generates $7.2B FCF at 26.7% margin, positive NaN/8 quarters
MCDONALDS CORP generated $7.2B in free cash flow (TTM), a 26.7% FCF margin, a margin that ranks Top 5% in Consumer Discretionary. Operating cash flow exceeds net income by 1.2x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-05.
| Metric | MCD | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 26.7% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $7.2B | Good | Positive cash generation |
| OCF/Net Income | 1.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: MCDONALDS CORP at -23.2x leverage
MCDONALDS CORP's debt-to-equity ratio of -23.2x reflects conservative leverage. Total debt of $41.5B offset by $774.0M in cash. Source: 10-Q filed 2025-11-05.
| Metric | MCD | Rating | Context |
|---|---|---|---|
| Debt to Equity | -23.2x | Excellent | Conservative capital structure |
| Net Cash Position | $-40.7B | Warning | Net debt position |
Valuation: MCDONALDS CORP trades at 25.5x earnings
MCDONALDS CORP trades at a P/E of 25.5x. Free cash flow yield of 3295804.6% offers attractive cash returns relative to price.
| Metric | MCD | Rating | Context |
|---|---|---|---|
| P/E Ratio | 25.5x | Adequate | Premium valuation |
| EV/Sales | 1.4x | Excellent | Attractive revenue multiple |
| FCF Yield | 3295804.6% | Excellent | Attractive cash return |
| Dividend Yield | 2.3% | Adequate | Growth focus over income |
Capital Allocation: MCDONALDS CORP returns 942971.2% shareholder yield
MCDONALDS CORP's total shareholder yield is 942971.2% (dividends 2.3% + buybacks 942968.9%). Source: 10-Q filed 2025-11-05.
| Metric | MCD | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 942971.2% | Excellent | Dividend + buyback yield combined |
| Buyback Yield | 942968.9% | Good | Active share repurchases |
| Total Capital Returned (TTM) | $7.2B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 22.1% | Top 25% | 2.5x above |
| Free Cash Flow Margin | 26.7% | Top 5% | 9.9x above |
| Operating Margin | 46.1% | Top 5% | 9.8x above |
| Return on Equity (ROE) | -306.6% | Top 5% | -28.8x below |
| P/E Ratio | 25.5x | N/A | - |
Financial Scorecard
| Metric | MCD | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 22.1% | Excellent | Top 25% of sector (median: 8.8%) |
| Free Cash Flow Margin | 26.7% | Excellent | Top 5% of sector (median: 2.7%) |
| Debt to Equity Ratio | -23.2x | Excellent | Conservative capital structure |
| P/E Ratio (Price-to-Earnings) | 25.5x | Adequate | Growth premium |
| Free Cash Flow Yield | 32958.0x | Excellent | High cash return |
Frequently Asked Questions
Q: What is MCDONALDS CORP's Return on Invested Capital (ROIC)?
MCDONALDS CORP (MCD) has a trailing twelve-month Return on Invested Capital (ROIC) of 22.1%. This compares above the sector median of 8.8%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is MCDONALDS CORP's Free Cash Flow Margin?
MCDONALDS CORP (MCD) has a free cash flow margin of 26.7%, generating $7.2 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is MCDONALDS CORP stock overvalued or undervalued?
MCDONALDS CORP (MCD) trades at a P/E ratio of 25.5x, which is above the sector median of N/A. The EV/Sales multiple is 1.4x. Free cash flow yield is 3295804.6%, which represents an attractive cash return to investors.
Q: Does MCDONALDS CORP pay a dividend?
MCDONALDS CORP (MCD) currently pays a dividend yield of 2.3%. Including share buybacks, the total shareholder yield is 942971.2%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: What is MCDONALDS CORP's revenue and earnings growth?
MCDONALDS CORP (MCD) grew revenue by 3.7% year-over-year. Earnings per share increased by 4.9% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is MCDONALDS CORP buying back stock?
MCDONALDS CORP (MCD) repurchased $2.1 billion of stock over the trailing twelve months. This represents a buyback yield of 942968.9%.
Q: How does MCDONALDS CORP compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, MCDONALDS CORP (MCD) shows: ROIC of 22.1% is above the sector median of 8.8% (Top 15%). FCF margin of 26.7% exceeds the sector median of 2.7% (Top 0% of sector). These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with MCDONALDS CORP?
MCDONALDS CORP (MCD) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-11-05. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.