McDonald’s Corporation (NYSE:MCD – Get Free Report)’s stock price was up 2.5% on Thursday. The company traded as high as $237.50 and last traded at $236.6440. Approximately 11,315,743 shares traded hands during trading, an increase of 168% from the average daily volume of 4,222,870 shares. The stock had previously closed at $230.88.
Key Stories Impacting McDonald’s
Here are the key news stories impacting McDonald’s this week:
- Positive Sentiment: McDonald’s continues to attract income-oriented investors. Its dividend increase, approximately 3.7% yield and strong franchise-driven cash flow make MCD relatively appealing as bond yields rise and investors seek growing dividend payers. What Is McDonald’s Signaling With Its Faster Dividend And New US Chief?
- Positive Sentiment: Analysts and some investment publications view McDonald’s as undervalued because of its high-margin, heavily franchised business model, attractive cash generation and compressed valuation. The company’s new U.S. leadership and menu initiatives could help improve domestic performance. McDonald’s Is Wall Street Overlooking Its High-Margin Franchise Model?
- Positive Sentiment: McDonald’s is testing AI ordering and spending $8.5 billion on its “Next” remodel program to improve speed, restaurant appeal and operating efficiency. Management also says a newer U.S. menu item is outperforming its internal expectations, offering potential growth if the momentum scales. Where Could McDonald’s Next Growth Come From?
- Neutral Sentiment: The company is defending itself against allegations that its AI-supported pricing tools coordinate prices among franchisees. McDonald’s says the lawsuit contains inaccuracies and that AI does not set menu prices, but the legal outcome and potential regulatory scrutiny remain uncertain. McDonald’s Accused of AI-Fueled Price Fixing
- Negative Sentiment: The AI-pricing class action creates potential legal costs, reputational damage and additional questions about corporate control over franchisees. The controversy could also undermine customer trust in McDonald’s use of personalized or dynamic pricing. McDonald’s Sued Over Alleged AI-Powered Menu Price-Fixing
- Negative Sentiment: Franchisees are reportedly pushing back against the expensive remodel initiative, increasing execution risk and potentially pressuring returns on invested capital. At the same time, discounts such as $5 meals and $6 combos have not clearly restored customer traffic, while consumer complaints about smaller portions and higher prices persist. $5 Meals, $6 Combos and Fewer Visits
- Negative Sentiment: Sanford C. Bernstein lowered its price target from $295 to $250 and kept a “market perform” rating, reflecting concerns about slowing growth, weak U.S. execution and leverage. Rising Treasury yields may further pressure highly indebted companies such as McDonald’s.
Wall Street Analyst Weigh In
Several brokerages recently commented on MCD. Mizuho decreased their target price on shares of McDonald’s from $300.00 to $290.00 and set a “neutral” rating on the stock in a research note on Friday, July 31st. Needham & Company LLC reissued a “buy” rating on shares of McDonald’s in a report on Monday, September 21st. Guggenheim decreased their price objective on shares of McDonald’s from $290.00 to $250.00 and set a “neutral” rating on the stock in a research report on Monday. Sanford C. Bernstein lowered their price objective on shares of McDonald’s from $295.00 to $250.00 and set a “market perform” rating for the company in a research note on Thursday. Finally, DZ Bank reiterated a “buy” rating on shares of McDonald’s in a report on Thursday, September 24th. One analyst has rated the stock with a Strong Buy rating, twenty-two have issued a Buy rating, thirteen have issued a Hold rating and one has assigned a Sell rating to the company. According to data from MarketBeat, the stock currently has a consensus rating of “Moderate Buy” and an average price target of $295.94.
McDonald’s Stock Performance
The stock has a market cap of $166.59 billion, a P/E ratio of 19.12, a price-to-earnings-growth ratio of 2.65 and a beta of 0.44. The firm has a 50-day moving average price of $255.31 and a 200-day moving average price of $274.52.
McDonald’s (NYSE:MCD – Get Free Report) last issued its quarterly earnings results on Tuesday, August 4th. The fast-food giant reported $3.38 earnings per share for the quarter, topping the consensus estimate of $3.32 by $0.06. The company had revenue of $7.10 billion for the quarter, compared to analysts’ expectations of $7.13 billion. McDonald’s had a negative return on equity of 572.06% and a net margin of 31.72%. The firm’s revenue for the quarter was up 3.7% on a year-over-year basis. During the same period in the prior year, the firm earned $3.19 earnings per share. On average, research analysts predict that McDonald’s Corporation will post 12.84 earnings per share for the current year.
McDonald’s Increases Dividend
The business also recently declared a quarterly dividend, which will be paid on Tuesday, December 15th. Stockholders of record on Tuesday, December 1st will be given a $1.93 dividend. The ex-dividend date of this dividend is Tuesday, December 1st. This represents a $7.72 dividend on an annualized basis and a dividend yield of 3.3%. This is an increase from McDonald’s’s previous quarterly dividend of $1.86. McDonald’s’s payout ratio is presently 60.44%.
Institutional Investors Weigh In On McDonald’s
A number of institutional investors have recently made changes to their positions in MCD. Bank of New York Mellon Corp acquired a new stake in shares of McDonald’s in the second quarter worth $1,359,276,000. Diamant Asset Management Inc. increased its holdings in McDonald’s by 30,979.0% in the first quarter. Diamant Asset Management Inc. now owns 2,596,340 shares of the fast-food giant’s stock valued at $806,917,000 after buying an additional 2,587,986 shares in the last quarter. J. Stern & Co. LLP raised its position in shares of McDonald’s by 9,867.5% in the fourth quarter. J. Stern & Co. LLP now owns 2,541,008 shares of the fast-food giant’s stock worth $776,608,000 after acquiring an additional 2,515,515 shares during the period. Arrowstreet Capital Limited Partnership boosted its stake in shares of McDonald’s by 49.9% during the 4th quarter. Arrowstreet Capital Limited Partnership now owns 3,104,337 shares of the fast-food giant’s stock worth $948,779,000 after acquiring an additional 1,033,041 shares in the last quarter. Finally, State Street Corp grew its position in shares of McDonald’s by 2.7% during the 4th quarter. State Street Corp now owns 35,983,997 shares of the fast-food giant’s stock valued at $10,997,789,000 after acquiring an additional 959,140 shares during the period. Hedge funds and other institutional investors own 70.29% of the company’s stock.
McDonald’s Company Profile
McDonald’s Corporation is a global quick-service restaurant company that operates and franchises restaurants under the McDonald’s brand. Its restaurants serve a menu that includes hamburgers, cheeseburgers, chicken sandwiches, French fries, breakfast items, desserts, salads, beverages and coffee. Offerings vary by market, and many locations provide drive-thru service, delivery and digital ordering through the McDonald’s mobile app.
The company operates through a heavily franchised business model, with restaurants owned and operated by independent franchisees, affiliates and the company itself.
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