/McDonald)
McDonald's Corporation (MCD), headquartered in Chicago, Illinois, operates and franchises fast-food chains under the McDonald's brand. Valued at $208.6 billion by market cap, MCD is the world's largest fast-food restaurant chain that offers various food products, soft drinks, and non-alcoholic beverages. With a global presence in over 40,000 locations in more than 100 countries, approximately 95% of its restaurants are owned and operated by independent local business owners.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and MCD definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the restaurant industry.
McDonald's success stems from its early leadership in the fast-food industry, innovation with drive-thru services, and adoption of new technologies like mobile ordering. Its strong brand, diverse menu and commitment to quality have built customer loyalty worldwide. Additionally, McDonald's efficient franchise model allows rapid expansion with reduced risk, helping it maintain its position as a global fast-food leader.
Despite its notable strengths, MCD slipped 4.3% from its 52-week high of $302.39, achieved on Jan. 22. Over the past three months, MCD stock gained 11%, outperforming the Dow Jones Industrials Average’s ($DOWI) 3.8% gains during the same time frame.
In the longer term, shares of MCD dipped 2.4% on a YTD basis but climbed 5.1% over the past 52 weeks, underperforming DOWI’s YTD gains of 7.1% and 17.1% returns over the last year.
However, MCD has traded above its 50-day and 200-day moving averages since early August, with fluctuations recently.
MCD’s overall performance can be attributed to the ongoing conflict in the Middle East and declining comparable sales in China, which outweighed the positive sales performance in Latin America and Japan. Additionally, consumers’ more selectiveness with their spending has also impacted their performance.
On Aug. 19, MCD shares rose over 3% after Evercore Inc. (EVR) raised its price target on the stock from $300 to $320.
On Jul. 29, MCD shares closed up more than 3% after reporting its Q2 earnings results, which showed a marginal decline in U.S. comparable store sales, a smaller decline than expectations of low single-digit losses as per Citigroup Inc. (C). Its adjusted EPS of $2.97 fell short of Wall Street expectations of $3.08. The company’s revenue was $6.5 billion, missing Wall Street forecasts of $6.7 billion.
McDonald’s rival, The Wendy's Company (WEN) shares have lagged behind the stock, with a 12.8% decline on a YTD basis and a 15.6% dip over the past 52 weeks.
Wall Street analysts are moderately bullish on MCD’s prospects. The stock has a consensus “Moderate Buy” rating from the 31 analysts covering it, and the mean price target of $299.48 suggests a potential upside of 3.4% from current price levels.
On the date of publication, Neha Panjwani 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.
