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McDonald's Corporation (MCD), headquartered in Chicago, Illinois, operates and franchises fast food chains under the McDonald's brand. Valued at $198.1 billion by market cap, MCD is the world's largest fast-food restaurant chain that offers various food products and non-alcoholic beverages. With a global presence in over 40,000 locations in more than 100 countries, approximately 95% of its restaurants are owned and operated by independent local business owners.
Shares of this leading global food retailer have underperformed the broader market considerably over the past year. MCD has declined 4.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 24.9%. In 2024, MCD stock is down 7.3%, while SPX is up 16.2% on a YTD basis.
Narrowing the focus, MCD has also lagged behind the AdvisorShares Restaurant ETF (EATZ). The exchange-traded fund has gained about 20% over the past year. Moreover, the ETF’s 10.9% gains on a YTD basis outshine the stock’s losses over the same time frame.
McDonald’s overall performance has been influenced by several factors. The ongoing conflict in the Middle East and declining comparable sales in China have overshadowed the positive sales performance in Latin America and Japan. Moreover, macroeconomic headwinds have also weighed on MCD stock.
On Aug. 2, MCD shares closed up more than 2% when it said it recorded an “incremental lift” of nearly 3% in restaurant guest counts after announcing a $5 deal meal promotion in the last week of June.
On Jul. 29, MCD shares closed up more than 3% after reporting its Q2 results, showing a marginal decline in U.S. comparable store sales, a smaller decline than expectations of low single-digit losses as per Citigroup Inc. (C). However, its adjusted EPS of $2.97 fell short of Wall Street expectations of $3.08, and its revenue was $6.5 billion, missing Wall Street forecasts of $6.7 billion.
For the current fiscal year, ending in December, analysts expect MCD’s EPS to decline 2.3% to $11.67 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in two of the last four quarters while missing the forecast on two other occasions.
Among the 31 analysts covering MCD stock, the consensus is a “Moderate Buy.” That’s based on 16 “Strong Buy” ratings, two “Moderate Buys,” and 13 “Holds.”
This configuration is less bullish than a month ago, with 17 analysts suggesting a “Strong Buy.”
On Jul. 29, Robert W. Baird analyst David Tarantino maintained a “Buy” rating on MCD with a price target of $280, implying a potential upside of 1.9% from current levels.
The mean price target of $297.76 represents an 8.3% premium to MCD’s current price levels. The Street-high price target of $355 suggests an upside potential of 29.2%.
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.
