McDonald's Stock is at a 52 Week Low! | McDonald's Stock Analysis! |

McDonald's stock just hit a new 52- week low. In the last year, they're now down by around 12%. And the last 5 years have been quite difficult, particularly due to the sell-off we've seen really since the start of March in 2026. The stock was trading around $334, now down to $263. And 5 years ago, that's around the range it was trading, close to $250. Now, to be completely fair, McDonald's is not alone in this. A lot of their peers have seen very subpar returns, particularly over the last 3 years. Starbucks has been choppy, but it's flat over the last 3 years. Chipotle down 23%. Yum Brands only up 8%. Pepsi has been hammered down 29% and Domino's Pizza, a holding of Birkshshire Hathaway down by 17%. So, this isn't strictly a McDonald's issue. Now, of course, selling off now puts McDonald's at one of its lowest PE multiples that we've seen in the last 5 years. It's trading at a PE multiple of 20.07. So, really, for the first time in quite some time, McDonald's is trading at a PE multiple lower than that of the S&P 500. That's pretty rare for this company. So, what's going on with McDonald's stock? Is this a massive opportunity to buy what has historically been a highquality stock? Let's start diving into it. And we'll start by looking at the dividend breakdown sheet. If we come over here, let's plug in MCD. What we can see is McDonald's is yielding around 2.8%. Now, to put that into just a little bit of perspective, look at the historical yield for this stock because it was considered a highquality dividend grower for the majority of the past decade. It was typically yielding somewhere closer to the low 2% range, sometimes dipping even below 2%. But with the sell-off combined with the fact that over the past 5 years they've grown dividends at around 7% they're now hitting one of their highest yields in the last few years. And what we can see is this dividend is backed by free cash flow. Typically the free cash payout ratio for McDonald's is sitting somewhere between 70 to 75%. It's remained relatively consistent over the last decade which typically is a good sign overall. If we jump over to our stock screener let's take a closer look. The data will load in. And like always, if you'd like to download any of these spreadsheet and get access to the ticker data add-on in Google Sheets that allows you to automatically import stock financials directly into your spreadsheet, then you can head over to tickerdata.com at the link in the description. Use code heat to get 30% off the annual plans. Now, when we look at McDonald's, what you'll notice is revenue per share was a little stagnant from 2015 to 2020, and then it starts growing. It started growing at a pretty healthy rate. earnings per share followed and they had record EPS in 2025 of around $12 per share. However, it is worth noting that the growth over the last few years has been relatively slow. I mean, in 2023 EPS was around $1163. So, if we take a closer look at the actual profitability metrics, we can see a 5-year revenue cagger of around 7% and a 10-year revenue kagger of around 0.56%. So, why has revenue growth been so bad for this company over the past decade, but meanwhile, earnings have continued to climb substantially? I mean, they have a 5-year net income kagger of 12.6%. Well, it's actually a relatively simple answer if you understand McDonald's business model. Look at what's happened to the gross profit ratio over the last decade. It's gone from below 40% to now hitting 57.4%. How did they do this? How did they pull something like this off? And the reality is they saw a bit of a shift in the actual business model. From 2015 to 2018, we can see revenue went from 25.4 billion all the way down to 21.2 billion. But what was happening behind the scenes is very, very important to understand. McDonald's started accelerating the sale of company-owned restaurants to franchises. And at that time, around 81% of its restaurants were franchised. But look at how this has changed. Only around 5% of McDonald's restaurants are now company-owned. What does that mean? Well, it means on the investment side, the upfront side, McDonald's has to supply the equipment, the building, and the real estate, but they also get all of the operating profits. So, this is a little more capital inensive. The margins aren't typically as good. But look at the primary business segments. Their conventional license, which is the majority of their restaurants, all they have to do is provide the building and real estate. While they don't collect the actual operating profits from the store, they do collect rent and they do collect royalties. So, they get a percent of sales with minimum rent payments. Now, the developmental license is perhaps even more interesting because there's essentially no upfront investment. So, the margins on this are incredible. However, in this case, they don't collect rent. They don't collect operating profits. All they do is collect the royalties. But, I mean, the margins on that are absolutely phenomenal. This is around 20% of their restaurants. And then we have foreign affiliated around 20% of their restaurants. Again, a very great margin-wise business. They have no upfront investment and they collect royalties as well as equity and earnings. So, this is the business model shift that caused their gross margins to expand considerably. And it's not just the gross profit margins. This margin expansion is finding its way to the bottom lines as well. For example, talk about the growth in free cash flow for McDonald's. Ultimately, it comes down to what the free cash flow margins look like. This is basically telling us what percentage of revenue is actually becoming free cash flow. Back in 2015 through 2017, this is around 16,7 or 18%. By 2025, this was closing in on around 27%. So for every $100 in revenue the company generates, now around $27 is actually becoming free cash flow. So ultimately, their plan has shaped out the way they intended. So that certainly gives us a little more understanding of why their financials look the way they currently do. But at the same time, the stock is down in the last year by 12% at a 52- week low and close to a 5-year low. They're only up by around 10%. Well, the good news is we know this isn't a decline in earnings. In fact, earnings per share hit a record level in 2025. But the caveat to that is earnings growth has really slowed down in the last few years. So, what does EPS projections look like as we move forward? Well, if we jump over to our sensitivity analysis, let's take a look. What we can see is McDonald's EPS kagger is projected to be about 7.7% through the year 2030. Now for reference, what we're looking at here is ticker data can automatically import the average analyst estimate when it comes to EPS. So it's a very cool feature. These are the estimated growth rates from analyst. So 7.7% is relatively strong at least for a stock like McDonald's. Now, with that being said, one of the things we can see is from their recent earnings report is that sales have been relatively slow, particularly as of late. Global comparable sales increased by just 3.8% in the recent quarter. Now, global comparable sales essentially means that the established McDonald's restaurants generated 3.8% more sales than they did in the same quarter a year earlier. I guess part of the issue of this is when you look at inflation, which has spiked considerably, we're sitting at about 3 to even 4.2% over the last few months. So really, global comparable sales growth was relatively stagnant. Now, if we talk about systemwide sales growth, it's different. It's around 11%, but it's just 6% in constant currency. So currency fluctuation is something they're benefiting from. Now, also keep in mind that also includes comparable sales growth at the existing restaurants and the sales from newly opened restaurants. So, it's technically not all organic growth. I mean, some of this is from opening new restaurants as well as the fact they're benefiting from currency fluctuations. So, this weakness as of late is no doubt a huge reason as to why we're seeing the stock sell off. Now, while McDonald's is generally speaking at least more defensive than most restaurant companies, it's certainly not immune to the economy. And a recent survey was just put out by Consumer Wise showing how US consumers currently feel about the economy in 2026. And probably to no one's surprise, we can see people are increasingly pessimistic and increasingly less optimistic. When the economy weakens, customers are going to cut back at eating at restaurants. And in theory, a lot of people would think they would choose cheaper options like McDonald's. But even at the exact same time, McDonald's is heavily impacted by inflation. Inflation is going to impact McDonald's through higher costs for their products like beef, chicken, other ingredients. It's also going to impact restaurant labor, packaging, utilities, construction, and equipment when they open new stores. And speaking of opening new stores, one of the things we have to consider, at least when it comes to the macroeconomic environment that McDonald's is operating in, is yes, inflation impacts them, but also think about what that means for interest rates. For reference, interest rates are still quite a bit higher than where they were back in 2020, 2021, 2022, and we've seen them pull back a little bit in the last year. There were three rate cuts in 2025. But what we're now seeing is that it's very likely that we're going to see a rate hike by the end of the year, potentially two rate hikes. So, why is that important for McDonald's? Well, remember what we just saw a moment ago? Most of McDonald's growth is coming from opening new stores. But when that's the case, when we have higher interest rates, higher interest rates make it more expensive for franchises to open new restaurants, to remodel their existing locations, and to purchase equipment. So, with McDonald's current situation, there's no doubt pros and cons to their business model. In theory, McDonald's revenue should be less volatile than that of a restaurant company operating every single location itself, particularly because in a lot of cases, they're just collecting royalties or even renting royalties. And if we look at revenue over the last few years, that has been the case. So that's a good sign. So there's certainly arguments for both sides when it comes to McDonald's business model, particularly in a higher interest rate environment where inflation is starting to climb once again. So naturally, we now have to answer the question of what does the valuation look like? Have they become interesting at current prices? And if we look at the valuation tab here on seeking Alpha, we can see they're trading around 17 to even close to 20% below their historical valuation multiples. So let's run it through a few different valuations. And we'll start by looking at our sensitivity analysis. We've already seen that the projected EPS Kagger for McDonald's is around 7.7% moving forward through 2030. So let's just use that exact number and let's assume that the PE multiple stays around where it's at. Maybe it climbs just a little bit higher closer to around a 22 trailing 12-month PE multiple. All of a sudden you can see compounded returns are sitting around 7 to 8%. But one of the things you have to keep in mind is that doesn't include the dividend which is now yielding around 2.8%. So, if this were to play out, if they can achieve EPS growth of around 7.7% and maintain their PE multiple, forward-looking returns are actually climbing close to around 10%. Which again is above historical market averages. If we run them through some other valuation models, here's what we can see. If we jump over to our dividend discount model and assume that they achieve dividend growth of around 6% moving forward, which keep in mind is just a little bit lower than what we've historically seen. It's keeping their free cash flow payout ratio likely in line with where it currently is considering the fact they are projected to grow earnings and free cash flow at around 7%. What would the results actually be? Well, if we zoom in, we can see assuming 6% dividend growth that would imply a fair value of around $34 implying around 15% upside from current prices. That's a little bit lower than what the average analyst price target is currently showing. The average analyst price target is $328 implying around 24.6% 6% upside from current prices. So, is McDonald's interesting at current prices? I think it's starting to get to an interesting range. I do think that they're certainly being hampered by what the macro economy looks like right now. And I don't know if that area will be improving anytime soon. However, if McDonald's does achieve the average EPS kagger of around 7.7%. It's clear that just simply growing the dividend close to in line with how they've historically grown it does imply a fair amount of upside around 15%. So, this could definitely be an opportunity to have on your watch list. Complete transparency like always. I don't personally plan on adding this to my portfolio. I think there's probably higher quality businesses with more predictable cash flows and cash flows growing at a faster rate with potentially even better valuations. So, go ahead and let me know what you think of McDonald's in the comments down below. And again, be sure to check out tickerdata.com at the link in the description to get access to any of the spreadsheets you saw in this video and be able to automatically import stock financials directly into your spreadsheet. So, with all that being said, thank you guys so much for watching and please don't forget to like and subscribe to the