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Down 12% This Year, What's Happening With McDonald's Stock?
MCDMcDonald's(MCD) Forbes·2024-07-22 12:45

Core Viewpoint - McDonald's stock has experienced a 12% decline year-to-date, currently priced around 260pershare,indicatinglimitednear−termgainsduetorisingcostsandconsumerpushbackagainstpriceincreases[1][2]FinancialPerformance−InQ12024,McDonald′srevenuegrew5260 per share, indicating limited near-term gains due to rising costs and consumer pushback against price increases [1][2] Financial Performance - In Q1 2024, McDonald's revenue grew 5% year-over-year to 6.2 billion, driven by a 2% increase in global comparable sales, marking the 13th consecutive quarter of same-store growth [3][4] - The adjusted bottom line for Q1 2024 grew 2% year-over-year to 2.70pershare[3]−Forecastedrevenuesforfiscalyear2024are2.70 per share [3] - Forecasted revenues for fiscal year 2024 are 26.9 billion, representing a 5% year-over-year increase, with expected EPS at 12.21[4][5]MarketPositionandValuation−McDonald′ssharesaretradingataforwardprice−to−earningsratioof22x,whichisbelowthefive−yearaverageof28x,suggestingpotentialforlong−termpriceappreciation[1]−TherevisedvaluationforMcDonald′sissetat12.21 [4][5] Market Position and Valuation - McDonald's shares are trading at a forward price-to-earnings ratio of 22x, which is below the five-year average of 28x, suggesting potential for long-term price appreciation [1] - The revised valuation for McDonald's is set at 280 per share based on the expected EPS and a P/E multiple of 22.9x for fiscal year 2024, indicating a nearly 7% upside from the current market price [5] Competitive Landscape - McDonald's has underperformed compared to the S&P 500 in recent years, with stock returns of 25% in 2021, -2% in 2022, and 13% in 2023, while the S&P 500 saw returns of 27%, -19%, and 24% respectively [2][3] - The company faces challenges from rising costs and slowing traffic across major markets, including the U.S., U.K., Australia, Germany, Canada, and Japan [1][3]