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MCD stock is down 5.67% YTD while global comps grew 3.8% and quarterly loyalty sales topped $9 billion. Wall Street's $331 consensus underweights McDonald's $38 billion loyalty flywheel spanning 70 markets and compounding systemwide sales. Reaching $375 by 2028 requires a 28x forward P/E, contingent on AI drive-thru margin gains, chicken share growth, and EPS near $15. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and McDonald's didn't make the cut. Grab the names FREE today.

McDonald's (NYSE:MCD) is the rare mega-cap where the business is accelerating while the stock sits still. Global comps grew 3.8% last quarter, loyalty sales topped $9 billion in 90 days, and revenue jumped 9.4% YoY. Yet shares are down 5.67% year to date.RiverNorthPhotography / iStock Unreleased via Getty Images

I think the disconnect creates an opportunity. The question I want to answer here: can McDonald's stock realistically hit $375 by 2028? That is the bold target. Here is the math behind it.

Why McDonald's Shares Are Stuck Despite Strong Fundamentals

The stock closed at $284.77 on June 11, well below the 52-week high of $337.56. Performance has been ugly in pockets: down 3.33% over one year and off nearly 5.67% YTD, even after a 4.42% bounce last week.

The reasons are real. CEO Chris Kempczinski acknowledged on the Q1 call that the macro backdrop "is certainly not improving, and it may be getting a little bit worse," with low-income spending still declining.

Beef inflation, higher interest expense (guided up 4 to 6% in 2026), and ongoing restructuring charges through 2027 are squeezing the narrative. With a beta of just 0.414, MCD is built to grind steadily higher rather than spike.

Wall Street Sees Modest Upside. Here's What It's Missing

Consensus target sits at $331.29, with 5 Strong Buy, 14 Buy, 14 Hold, and 1 Sell rating. Our model's base case lands at $322.66 over 12 months, with a bull scenario of $349.85 and a bear case of $298.80. Confidence is 90%, which is high.

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My view: analysts are anchoring to near-term beef costs and underrating the loyalty flywheel. TTM loyalty sales already exceed $38 billion across 70 markets. With 56% bullish analyst skew already in place, the upside surprise is operational leverage, not sentiment.

The Path to $375 Per Share

Reaching $375 from today's price of $284.77 would require a gain of 31.7%. With forward EPS of $13.40, a price of $375 implies a forward P/E of 28x. Our base case of $322.66 already implies 23x, meaning the bold target requires roughly 5x of additional multiple expansion.

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Is that achievable? I think yes, but only if three things happen. First, the 247Factor adjustment of 1.074 needs to keep expanding as comps stay positive. Second, the "McDonald's NEXT" strategic repositioning and the ArchIQ AI drive-thru rollout with Google have to start showing margin lift.

Third, the chicken category, which Kempczinski called "bigger than beef globally, and it's growing 2x faster," needs to keep taking share. Add the FIFA World Cup 2026 marketing push and a 50,000-restaurant footprint target by 2027, and the EPS denominator does the work. The primary risk is a deeper consumer recession that stalls comps and forces value-driven margin compression.

Where McDonald's Trades Today vs Its Earnings Power

At $284.77, MCD trades at roughly 21x forward earnings, below its trailing P/E of 23 and the forward P/E of 22. Shares sit between a 52-week low of $270.15 and a high of $337.56. Over the past decade, MCD has returned 194.66%, proving the compounding case. For a defensive name throwing off a 2.61% yield and $7.19 billion in annual free cash flow, that multiple looks like value.

$375 Is a Stretch, But Here's Why It's Possible

Reaching $375 by 2028 requires a 31.7% gain and a forward multiple near 28x. That is a stretch, but not a long shot.

Three things need to go right: loyalty members keep driving systemwide sales above 6%, the chicken and beverage platforms scale internationally, and EPS compounds toward $14 to $15. A consumer recession deeper than today's pressure would derail it. Returns at this level shouldn't be expected every year, but we've outlined the blueprint for how McDonald's could reach $375 in 2028.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and McDonald's didn't make the cut. Grab the names FREE today.

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Is WEN a good stock to buy? We came across a bullish thesis on The Wendy's Company on r/investing_discussion by Variant_Invest. In this article, we will summarize the bulls' thesis on WEN. The Wendy's Company's share was trading at $6.71 as of June 9th. WEN's trailing and forward P/E were 8.71 and 11.57 respectively according to Yahoo Finance.Josh Brown on JPMorgan’s Bearish Call on Shake Shack(SHAK): ‘This Type of Thing Come and Go’

The Wendy's Company, together with its subsidiaries, engages in the operation, development, and franchising of a system of quick-service restaurants in the United States and internationally. WEN is being priced by the market as a structurally impaired quick-service restaurant operator following a period of weak comparable sales and traffic softness, but the underlying franchise model suggests the narrative is overstated.

Read More: 15 AI Stocks That Are Quietly Making Investors Rich

Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential

The company operates an asset-light royalty based system with roughly 7,000 franchised restaurants, meaning earnings primarily come from royalty streams rather than company-owned store profits, which limits downside during temporary franchisee weakness.

Recent US performance deterioration has been largely self-inflicted, driven by inconsistent value positioning, weakened brand differentiation, and a breakfast initiative that underwhelmed, rather than any structural decline in demand. This positioning reset creates a clear path for recovery if management executes with discipline, similar to past consumer brand turnarounds where focused simplification and marketing clarity restored traffic momentum. International operations in markets such as Canada and the United Kingdom are quietly growing, adding incremental unit expansion and diversifying the earnings base away from US cyclicality.

At current valuation levels, Wendy's is effectively priced as if the margin pressure and comp weakness are permanent, despite the durability of its royalty model and long dated brand equity spanning decades. If US execution stabilizes and menu and brand initiatives begin to show traction, earnings should recover sharply given the high operating leverage inherent in franchise royalty structures, creating a meaningful rerating opportunity from trough expectations to normalized growth levels. Overall, the stock offers an attractive risk-reward profile as improving execution and stable franchise economics could drive multiple expansion and earnings normalization over time from here now.

Previously, we covered a bullish thesis on McDonald's Corporation (MCD) by Pacific Northwest Edge's Substack by David in October 2024, highlighting strong free cash flow, aggressive buybacks, and disciplined capital allocation. MCD's stock price has depreciated by approximately 5.46% since our coverage. Variant_Invest shares a similar view on The Wendy's Company (WEN) but emphasizes franchise model resilience and execution-led recovery potential in a peer quick-service restaurant business.

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The Wendy's Company is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held WEN at the end of the first quarter which was 36 in the previous quarter. While we acknowledge the risk and potential of WEN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WEN and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None.

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McDonald's Corporation MCD stock has fallen 12.8% over the past three months compared with the industry's decline of 6.8%. In the same time frame, the S&P 500 has returned 11%.

Investor sentiment has been pressured by concerns about a softer consumer spending environment, rising commodity costs, margin pressures and expectations of slower near-term sales growth. While the fast-food giant continues to gain market share and execute well operationally, Wall Street appears focused on the hurdles that could limit earnings growth in the coming quarters.

On the other hand, MCD has also underperformed compared with industry peers such as Starbucks Corporation SBUX and Yum! Brands, Inc. YUM, as shown in the chart below.

Price PerformanceZacks Investment Research

Image Source: Zacks Investment Research

Why Has McDonald's Stock Lost Momentum?

A key concern is the continued pressure on lower-income consumers, a customer group that represents an important portion of McDonald's traffic. Management noted that while higher-income consumers remain resilient, lower-income diners are still reducing spending as they grapple with elevated fuel prices and broader inflation. Although McDonald's value initiatives have helped recapture some of these customers, demand from this group remains weaker than historical levels, creating uncertainty around traffic growth.

Inflationary pressures are also weighing on investor confidence. Beef prices remain elevated globally, increasing operating costs across the system. Franchisees in both the United States and international markets are facing higher food, labor and operating expenses, which are putting pressure on profitability. While McDonald's has leveraged supply-chain efficiencies and hedging strategies to mitigate some of these challenges, management warned that inflationary risks could persist into late 2026 and beyond.

Another issue is profitability. Despite healthy sales growth during the first quarter, management admitted that margins at company-operated restaurants in the United States were below expectations. Higher labor investments combined with restrained pricing actions hurt profitability, raising concerns about the pace of margin recovery. The company is now reviewing whether some company-operated restaurants could generate better returns under franchise ownership.

Investors are also digesting management's outlook for the second quarter. The company expects a noticeable slowdown in comparable-sales growth following difficult comparisons with last year's highly successful Minecraft promotion. Although management remains optimistic about the underlying strength of the business, a slower growth trajectory often weighs on investor sentiment. Geopolitical uncertainty is another overhang. Ongoing tensions in the Middle East have increased supply-chain risks and contributed to higher energy and commodity costs. While the direct impact on first-quarter results was limited, the situation has added another layer of uncertainty for global consumer companies.

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What Is McDonald's Doing to Revive Growth?

McDonald's is responding aggressively by reinforcing its value leadership. The company recently expanded its McValue platform with a menu featuring items priced below $3 and a new $4 Breakfast Meal Deal. These offerings complement existing value bundles and are designed to attract cost-conscious consumers while driving traffic across dayparts.

The company is also leaning heavily on marketing and brand partnerships. Recent collaborations with Netflix and other entertainment franchises have helped generate consumer engagement, while the upcoming FIFA World Cup sponsorship is expected to provide another significant traffic-driving opportunity across key markets.

Menu innovation remains a major priority as well. McDonald's has launched a new beverage platform in several markets, including the United States, Germany and Canada. The lineup features refreshers, crafted sodas and upcoming energy-drink offerings. Management views beverages as a sizable long-term growth category capable of driving incremental sales and customer visits.

At the same time, the company continues to gain market share in most of its major markets. Strong execution across value, marketing and menu innovation helped McDonald's deliver positive comparable-sales growth and maintain momentum despite a difficult operating backdrop. Management also reaffirmed its long-term expansion plans and remains committed to reaching approximately 50,000 restaurants globally by 2027.

McDonald's Growth Projection Encourages

In the past 30 days, the company's earnings for 2026 and 2027 have decreased by 14 cents each to $12.93 and $14.12, respectively. The Zacks Consensus Estimate for MCD's 2026 and 2027 earnings per share indicates a year-over-year increase of 6% and 9.2%, respectively.Zacks Investment Research

Image Source: Zacks Investment Research

The consensus estimate for revenues is pegged at $28.42 billion and $30.08 billion for 2026 and 2027, implying a year-over-year improvement of 5.7% and 5.8%, respectively.

MCD Stock Trades at a Discount

McDonald's is currently valued at a discount compared with its industry on a forward 12-month price-to-earnings basis. The company's forward 12-month P/E ratio stands at 20.99X, lower than the industry's average of 22.24X. Meanwhile, Starbucks and Yum! Brands are trading at P/E ratios of 34.42X and 21.37X, respectively.

P/E (F12M)Zacks Investment Research

Image Source: Zacks Investment Research

Buy the Dip or Stay Away?

Despite McDonald's strong brand, market-share gains and ongoing growth initiatives, investors may prefer to stay on the sidelines for now due to several near-term challenges. The company continues to face pressure from cautious spending among lower-income consumers, while persistent inflation in food, labor and operating costs is weighing on profitability across its restaurant network.

Management has also acknowledged margin weakness in its company-operated stores and expects softer sales momentum in the near term. Although McDonald's is investing in value offerings, marketing campaigns and menu innovation to support growth, these initiatives may take time to offset the impact of a challenging consumer environment and rising costs. With earnings estimates moving lower and multiple external uncertainties still clouding the outlook, investors may find better risk-reward opportunities elsewhere until clearer signs of sustained demand improvement and margin recovery emerge.

MCD currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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Starbucks Corporation (SBUX) : Free Stock Analysis Report

McDonald's Corporation (MCD) : Free Stock Analysis Report

Yum! Brands, Inc. (YUM) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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McDonald's (MCD) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Shares of this world's biggest hamburger chain have returned +2.5% over the past month versus the Zacks S&P 500 composite's -1.6% change. The Zacks Retail - Restaurants industry, to which McDonald's belongs, has lost 0.8% over this period. Now the key question is: Where could the stock be headed in the near term?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Earnings Estimate Revisions

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

For the current quarter, McDonald's is expected to post earnings of $3.34 per share, indicating a change of +4.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.

The consensus earnings estimate of $12.93 for the current fiscal year indicates a year-over-year change of +6%. This estimate has changed -0.2% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $14.12 indicates a change of +9.2% from what McDonald's is expected to report a year ago. Over the past month, the estimate has changed -0.5%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, McDonald's is rated Zacks Rank #4 (Sell).

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The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS12-month consensus EPS estimate for MCD

Projected Revenue Growth

Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.

For McDonald's, the consensus sales estimate for the current quarter of $7.15 billion indicates a year-over-year change of +4.5%. For the current and next fiscal years, $28.42 billion and $30.08 billion estimates indicate +5.7% and +5.8% changes, respectively.

Last Reported Results and Surprise History

McDonald's reported revenues of $6.52 billion in the last reported quarter, representing a year-over-year change of +9.4%. EPS of $2.83 for the same period compares with $2.67 a year ago.

Compared to the Zacks Consensus Estimate of $6.49 billion, the reported revenues represent a surprise of +0.49%. The EPS surprise was +3.28%.

Over the last four quarters, McDonald's surpassed consensus EPS estimates three times. The company topped consensus revenue estimates each time over this period.

Valuation

No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

McDonald's is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about McDonald's. However, its Zacks Rank #4 does suggest that it may underperform the broader market in the near term.

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McDonald's Corporation (MCD) : Free Stock Analysis Report

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Brad Blum knows better than most that it's never what you say that makes a great leader. Few actions in Blum's lifetime reflect that better than when, as a product manager for the Wheaties cereal brand at General Mills, he was touring a cereal production facility back in the mid-1980s, when a Black factory worker looked Blum in the eye and asked: Why hasn't a Black person been on a Wheaties package? Blum had no answer.

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In recent days, McDonald's has rolled out its "McDonald's NEXT" plan, new AI-powered drive‑thru pilots with Google, and FIFA World Cup 26 promotions, while also facing scrutiny after a severe workplace violence incident at a California restaurant left a shift manager badly burned. Together, these developments highlight how McDonald's push into automation and experiential marketing sits alongside renewed questions about workplace safety and operational controls. We'll now examine how McDonald's renewed push into AI-driven drive‑thru automation could reshape the company's existing investment narrative.

Capitalize on the AI infrastructure supercycle with our selection of the 48 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow.

McDonald's Investment Narrative Recap

To own McDonald's, you have to believe its global scale, brand strength, and ongoing tech and digital investments can keep driving resilient cash flows, even as costs and competition stay intense. In the near term, the key catalyst is whether initiatives like McDonald's NEXT and AI-enhanced operations translate into better efficiency, while the California workplace violence incident mainly heightens scrutiny of safety and culture rather than altering the core business outlook.

Among the recent announcements, the AI-powered drive thru pilot with Google is most relevant, since it sits at the center of McDonald's broader automation and McDonald's NEXT plans. If the company can execute this technology well, it may help address the execution risk around large upfront tech spending by improving order accuracy and throughput, which is one of the main levers behind the current investment case.

Yet behind the efficiency story, investors should also be aware of rising questions around workplace safety and operational controls...

Read the full narrative on McDonald's (it's free!)

McDonald's narrative projects $32.0 billion revenue and $10.6 billion earnings by 2029.

Uncover how McDonald's forecasts yield a $331.29 fair value, a 17% upside to its current price.

Exploring Other PerspectivesMCD 1-Year Stock Price Chart

Twelve fair value estimates from the Simply Wall St Community span roughly US$249 to US$331 per share, showing how differently individual investors are sizing up McDonald's. Against that backdrop, the execution risk around heavy technology spending and AI rollouts could be a key factor shaping how these varied views on the company's future performance evolve.

Explore 12 other fair value estimates on McDonald's - why the stock might be worth 12% less than the current price!

Story Continues

The Verdict Is Yours

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

A great starting point for your McDonald's research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision. Our free McDonald's research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate McDonald's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MCD.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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McDonald's Corporation (NYSE:MCD) was among the stocks Jim Cramer discussed on Mad Money, along with the recent sell-off in the market. When a caller mentioned that they are worried about the stock, Cramer said:

You're worried about McDonald's? Nah, you don't need to worry about McDonald's. Look, McDonald's, it does have a, it has a beef issue. Beef is too expensive. But it yields 2.6, it's got a great reputation, and it sells at 21 times earnings. It can get down to 18, 19. Here's the way you do McDonald's: You want to buy 100 shares? You buy 25 at 280. This is what I'm doing, by the way, with some of my stocks in my Charitable Trust. I'm buying really small amounts way down, get a better basis. 25 at 279, 25 at 270, 25 at 265, and then 50 if it does get to 260, and then you'll have a great basis, and you'll be doing just terrific.

McDonald's Corporation (NYSE:MCD) operates and franchises restaurants that provide burgers, chicken sandwiches, fries, beverages, and desserts.

While we acknowledge the potential of MCD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years

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Key Points

The AI craze has left several prominent stocks in other industries on the bargain rack. Consumers drive the economy -- iconic brands across staples and discretionary markets have become dividend stalwarts. This list covers real estate, fast food, household goods, home improvement, and healthcare.10 stocks we like better than Realty Income ›

The artificial intelligence (AI) boom has defined the stock market since early 2023. AI and other technology stocks have been the big winners more often than not over that time, but the AI trade won't work forever. Eventually, the market will zig and zag as it tends to, and new stocks in other industries will have their moment.

Nobody knows when that time may come, which is why it's so important for long-term investors to diversify their portfolios. A portfolio of 50 or so high-quality companies across all the market sectors can build serious wealth over time and endure the market's inevitable unpredictability. That could mean adding some dividend stocks from non-tech sectors to balance things out.

Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »

Here are five blue chip dividend stocks to consider buying and holding in case the AI trade ends.

Image source: Getty Images.

1. Realty Income

Real estate is a classic income-generating investment. Realty Income(NYSE: O) is a leading real estate investment trust (REIT) that acquires and leases real estate and distributes most of its cash profits to investors as dividends. Realty Income specializes in retail properties, such as restaurants and convenience stores, but has expanded into other property types in recent years, including casinos and industrial properties.

Realty Income pays a monthly dividend, which is somewhat uncommon, and the company has increased the payout for more than 30 consecutive years. Raising dividends during recessions and the COVID-19 pandemic speaks to the company's resilient rental income streams. The stock currently yields 5.3%, and that dividend can do wonders over time when investors reinvest it for more shares.

2. McDonald's

Investors won't find a more iconic franchise business than McDonald's(NYSE: MCD). The world's largest restaurant chain has more than 45,000 locations in more than 100 countries, which generate steady revenue for the company through royalties and franchise fees each location pays. Consumers tend to associate the brand with value, so McDonald's tends to hold up better than most restaurants during recessions.

McDonald's continues to pay and increase its dividend to shareholders. Now with 49 consecutive annual dividend hikes, McDonald's is on the cusp of becoming a Dividend King, a company with at least five decades of uninterrupted dividend growth. Investors looking for a simple business that continues to churn out steady growth should take a close look here.

3. Clorox

Home products are one of the most underrated but consistent market segments. The Clorox Company(NYSE: CLX) is among a handful of companies that sell some of the most trusted consumer brands, including Clorox, Purell, Glad, Hidden Valley Ranch, Burt's Bees, Brita, and Kingsford. These are products people tend to buy and use regardless of the economy, and they tend to buy these brands because they know them.

Clorox's current dividend growth streak sits at 48 years, making it another soon-to-be Dividend King. Since the pandemic, Clorox has struggled with high costs and a cybersecurity breach. The stock price has tumbled, and the dividend yield is up to 5.2%. But Clorox still earns enough to cover its dividend, and the recent Gojo acquisition (Purell) should boost earnings growth.

4. Home Depot

Housing is one of the U.S. economy's prominent consumer markets, which has helped make Home Depot(NYSE: HD) one of the world's most successful retailers. People tend to invest in their homes, and that includes the maintenance and upkeep virtually every house needs. Home Depot stores blanket the United States, which has helped the company adapt to e-commerce by using its stores as a distribution network.

Home Depot returns much of its cash profits to shareholders through dividends and stock buybacks, a formula that has produced life-changing total investment returns over its lifetime. The stock is down right now due to a slow housing market and consumers struggling with rising living expenses. While housing may fluctuate, it's arguably an evergreen market. Investors should look into buying the stock on its current dip.

5. Medtronic

Healthcare is another forever market. People always need care, and there's an ongoing pursuit of newer and better ways to treat patients. Medtronic(NYSE: MDT) is one of the world's leading healthcare companies, with a broad range of medical products and equipment across cardiovascular, neuroscience, and general surgery applications. Medtronic's decades of success have made the stock a soon-to-be Dividend King, poised for its 50th consecutive annual dividend increase next year.

The company recently spun off its diabetes business segment as MiniMed to reignite growth and entered the robotics-assisted surgery market in the U.S. after its Hugo platform received FDA approval in December 2025. Shares offer a starting dividend yield of 3.5% and trade at less than 14 times 2026 earnings estimates. Analyst estimates of 6% to 7% annualized earnings growth over the coming years make Medtronic a bargain at this price.

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Justin Pope has positions in Clorox and McDonald's. The Motley Fool has positions in and recommends Home Depot, Medtronic, and Realty Income. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Investors may be wondering if McDonald's current share price lines up with its underlying worth, or if the stock is offering a margin of safety right now. The stock last closed at US$282.25, with a 2.1% gain over the past week, a 2.4% gain over the past month, and returns that are down 6.9% year to date and down 3.8% over the past year, while still showing a 5.0% gain over three years and 34.0% over five years. Recent headlines have focused on McDonald's position in the global fast food sector and how consumer demand trends and competitive pressures may be shaping expectations for future performance. These themes help explain why shorter term returns look different to the longer term record. McDonald's currently has a valuation score of 2 out of 6. The rest of this article will break down what that means using several valuation approaches, before finishing with a broader way to think about what the stock is really worth.

McDonald's scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: McDonald's Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimated future cash flows, then discounts them back to what they might be worth today. It is essentially asking what those future dollars are worth in present terms.

For McDonald's, the latest twelve month Free Cash Flow is about $7.52b. Analysts provide explicit forecasts for several years, and Simply Wall St then extends those out using its own assumptions. Under this 2 Stage Free Cash Flow to Equity model, projected annual Free Cash Flow reaches about $13.05b in 2035, with each future year discounted back to today using a required rate of return.

Adding those discounted cash flows together gives an estimated intrinsic value of $244.63 per share. Compared with the recent share price of $282.25, the DCF output suggests the stock is about 15.4% above this estimate of fair value. This points to McDonald's trading on the expensive side based on this model.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests McDonald's may be overvalued by 15.4%. Discover 46 high quality undervalued stocks or create your own screener to find better value opportunities.MCD Discounted Cash Flow as at Jun 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for McDonald's.

Approach 2: McDonald's Price vs Earnings (P/E)

For profitable companies like McDonald's, the P/E ratio is a commonly used shortcut for what investors are currently paying for each dollar of earnings. It helps you compare how the market is pricing earnings across different companies on a like for like basis.

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What counts as a "normal" or "fair" P/E depends on how quickly earnings are expected to grow and how risky those earnings are viewed to be. Higher expected growth or lower perceived risk can justify a higher P/E, while lower growth or higher risk usually point to a lower P/E.

McDonald's currently trades on a P/E of 23.11x. That sits above the broader Hospitality industry average of 20.34x, but below the peer group average of 49.48x. Simply Wall St's Fair Ratio for McDonald's is 28.49x. This is its estimate of a suitable P/E given factors such as the company’s earnings profile, margins, industry, market value and risk characteristics. This Fair Ratio is more tailored than a simple industry or peer comparison because it adjusts for company specific traits rather than relying only on broad group averages. Since the current P/E of 23.11x is below the Fair Ratio of 28.49x, the stock screens as undervalued on this metric.

Result: UNDERVALUEDNYSE:MCD P/E Ratio as at Jun 2026

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Upgrade Your Decision Making: Choose your McDonald's Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives bring this to life by letting you connect your view of McDonald's business, such as how you see its margins, revenue growth or risks, to a set of financial forecasts and a fair value. You can then compare that with the current share price to decide whether the stock looks expensive or cheap on your terms.

On Simply Wall St's Community page, millions of investors use Narratives as an accessible tool, where each Narrative is a short story backed by explicit numbers. Those numbers automatically refresh when new information such as earnings results or major news is added, so your fair value view keeps moving with the data rather than going stale.

For example, one McDonald's Narrative on the platform might lean cautious and use a fair value of about US$238.97 based on multiple methods. Another more optimistic Narrative aligns with the analyst consensus fair value of about US$331.29. Seeing those side by side helps you decide which story and set of assumptions feels closer to your own expectations before you act.

For McDonald's however we'll make it really easy for you with previews of two leading McDonald's Narratives:

🐂 McDonald's Bull Case

Fair value: US$331.29

Current price vs this fair value: about 14.8% below the narrative estimate

Forecast revenue growth used in this narrative: 5.23% a year

Focuses on expansion in emerging markets, especially China and other higher growth regions, to support international revenue. Builds in a larger role for digital, loyalty and AI enabled efficiency gains to support margins and free cash flow. Uses the analyst consensus fair value of about US$331.29, with expectations for higher earnings, slightly wider margins and a P/E of about 28.5x by 2029.

🐻 McDonald's Bear Case

Fair value: US$238.97

Current price vs this fair value: about 18.1% above the narrative estimate

Forecast revenue growth used in this narrative: 4.86% a year

Gives McDonald's credit for a wide moat, high recent returns on capital and strong margins, but expects only modest revenue and EPS growth. Applies several valuation methods, including DCF, earnings based approaches, dividend models and historical multiples, which mostly cluster below the current share price. Argues that at recent prices the stock screens as expensive on many of these measures, so the author prefers a lower entry point based on their margin of safety framework.

If you want to see how other investors are framing these trade offs and build your own view of fair value and risk for McDonald's, See what the community is saying about McDonald's

Do you think there's more to the story for McDonald's? Head over to our Community to see what others are saying!NYSE:MCD 1-Year Stock Price Chart

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MCD.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!

McDonald's (MCD) Franchise-Modell mit 95% franchisierten Standorten erzielt einen Betriebsertrag von etwa 46% und hat im letzten Jahrzehnt eine Preisrendite von 192% erreicht. McDonald's erhöhte seinen Quartalsdividende um 5% im Oktober 2025, während es 7 Milliarden US-Dollar an freiem Cash-Flow erzielte und Einkommensinvestoren unabhängig von Marktentwicklungen belohnte. Der Analyst, der NVIDIA 2010 richtig vorhergesagt hat, hat seine Top-10-AI-Aktien vorgestellt – und McDonald's wurde nicht aufgeführt.