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Commanding a market cap of about $189.3 billion, Chicago-based McDonald's Corporation (MCD) leads the fast-food industry globally, operating and franchising restaurants under its iconic brand. It offers a diverse menu of food and beverages, predominantly through independently owned and operated franchises across its distinct geographic segments.
Companies valued at $10 billion or more are generally considered "large-cap" stocks, and McDonald's fits this criterion perfectly, exceeding the mark. The fast-food giant rapidly expanded its footprint, with revenue from both company-operated and franchise restaurants. With over 36,000 stores worldwide serving nearly 54 million customers daily, McDonald's solidifies its position as a global leader in the fast-food industry, second only to Subway in terms of store count.
However, the global fast-food giant has fallen off its lofty perch, with MCD stock down 13.8% from its 52-week high of $302.39. Shares of MCD are down 11.1% over the past three months, underperforming the broader Nasdaq 100 Index's ($IUXX) 5.1% gain over the same time frame.
Longer term, MCD is down 12.3% on a YTD basis, lagging behind the IUXX's 11.8% gains. Moreover, shares of McDonald's have declined 9.8% over the past 52 weeks, compared to IUXX's 29.2% gains over the same time frame.
To confirm the bearish price trend, MCD has been trading below both its 50-day and 200-day moving averages since March.
McDonald's underperformance can be attributed to sluggish sales in key markets like China and France, the lingering impact of conflicts in the Middle East affecting its operations, and concerns about affordability and pricing strategies amid shifting consumer behavior. Furthermore, the stock dropped initially after its Q1 earnings result due to concerns over inflation impacting consumer spending but quickly recovered as investors recognized the company's resilient franchise-based business model and consistent dividend payouts.
To emphasize the stock’s underperformance, rival Yum! Brands (YUM) is still outperforming MCD. Yum! Brands stock has gained 4.6% over the past 52 weeks and is up 7.5% on a YTD basis.
Despite the stock’s underwhelming price action, analysts think MCD can recover soon. The stock has a consensus rating of "Moderate Buy" from the 30 analysts in coverage, and the mean price target of $315.43 is a premium of 20.1% to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
