McDonald's (MCD)
Consumer Discretionary · $199B market cap · SEC CIK 0000063908
ahead of 59% of the S&P 500 · #20 of 48 in Consumer Discretionary
Next reports on Feb 9, 2027, after the close, with analysts expecting $3.23 in earnings per share.
52-week range $229.20 to $341.75. 17% below its 52-week high and 23% above its low.
The case for MCD
- Generated $7.2B of free cash flow in FY2025, 27% of revenue.
- 32% of revenue drops through to net profit.
- Earns 15% a year on everything it owns (return on assets).
- Gross margin of 58% absorbs cost shocks.
- Moves less than the market (beta 0.40).
- Pays a modest 2.4% dividend.
The case against
- Priced at 7.1× sales with revenue growing only 5.8%.
- Owes more than it owns: shareholder equity is −$1.8B, usually the result of buybacks funded with debt. ROE and price-to-book mean little here.
- Long-term debt of $40.0B against $774M of cash.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Consumer Discretionary companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 52 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 51 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 82 |
| Momentumhow the price has behaved lately | 47 |
| Stabilityhow violently it moves, what it owes and what it pays you | 56 |
- Shareholder equity is negative, so return on equity, price-to-book and debt-to-equity are left out.
- Each factor except momentum is half fixed thresholds, half rank among the 48 Consumer Discretionary companies.
The financials
Revenue growth
Is the business growing? Slowly
| Last 12 months | +5.8% |
|---|---|
| Over 5 years | +7.0% a year |
| FY2025 revenue | $26.9B (+4%) |
Free cash flow
Is it generating real cash? Yes, plenty
| FY2025 free cash flow | $7.2B |
|---|---|
| Of revenue | 27% |
| Of profit | 84% |
Profit margins
Is profitability improving? Holding steady
| Gross margin | 58% |
|---|---|
| Operating margin | 47% |
| Net margin, FY24 → FY25 → now | 31.7% → 31.9% → 32.4% |
Debt vs. cash
Is the balance sheet healthy? Stretched
| Cash | $774M |
|---|---|
| Long-term debt | $40.0B |
| Net debt | $39.2B |
| Years to repay | 3.8 yrs |
Valuation
Is the stock price reasonable? Yes, about fair
| P/E | 22.1× |
|---|---|
| Fair P/E for its growth | 25× |
| P/FCF | 27.6× |
| Forward P/E | 19.0× |
| EV / EBITDA | 17.9× |
At 22.1× earnings it trades close to the 25× that 9% a year of growth plus a 2.4% dividend would justify. At 27.6× free cash flow it trades close to that same mark.
The financials, five years deep
Pulled from McDonald's's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $26.9B | $25.9B | $25.5B | $23.2B | $23.2B |
| Change on the year | +4% | +2% | +10% | 0% | — |
| Free cash flow | |||||
| Free cash flow | $7.2B | $6.7B | $7.3B | $5.5B | $7.1B |
| Of revenue | 27% | 26% | 28% | 24% | 31% |
| Profit margins | |||||
| Operating margin | 46.1% | 45.2% | 45.7% | 40.4% | 44.6% |
| Net margin | 31.9% | 31.7% | 33.2% | 26.6% | 32.5% |
| Debt vs. cash | |||||
| Cash | $774M | $1.1B | $4.6B | $2.6B | $4.7B |
| Long-term debt | $40.0B | $38.4B | $37.2B | $35.9B | $35.6B |
| Net cash (debt) | −$39.2B | −$37.3B | −$32.6B | −$33.3B | −$30.9B |
Filings
The text of this 10-K could not be read automatically. The original is linked below.