MMarketMath

MCD

StalwartQuality: Medium (65/100)1 red flag

McDonald's · Consumer Discretionary · Restaurants

$272.54

52w 260.96 – 341.75

20y monthly, adjusted

Mkt cap

$192.9B

P/E

22.2

P/FCF

26.5

FCF yield

3.8%

ROE

-478.1%

Shldr yield

3.8%

div 2.7% + bb 1.1%

What today's price assumes

At $192.9B, the market is pricing in 11.5% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew 4.3% per year — the price asks for acceleration beyond the historical record.

Simple DCF per-share range: $155 · $158 · $197 (4% / base / optimistic growth). An estimate, not a target.

Adjust the assumptions yourself →

Historical multiple lens

At its own median P/OCF of 0.0× across 19 years, MCD would trade near $0/share (25th–75th percentile: $0–$0); it trades at 18.3× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

+5.1%

Rev 5y

+7.0%

Rev 10y

+0.6%

EPS 5y

−92.8%

EPS 10y

−72.5%

FCF 5y

+9.2%

FCF 10y

+4.3%

Fundamentals

Fiscal 2007–2025, from SEC filings

Revenue

2007: $22.8B
2008: $23.5B
2009: $22.7B
2010: $24.1B
2011: $27.0B
2012: $27.6B
2013: $28.1B
2014: $27.4B
2015: $25.4B
2016: $24.6B
2017: $22.8B
2018: $21.3B
2019: $21.4B
2020: $19.2B
2021: $23.2B
2022: $23.2B
2023: $25.5B
2024: $25.9B
2025: $26.9B
$0$10.0B$20.0B
07
11
15
19
23

Net income

2007: $2.4B
2008: $4.3B
2009: $4.6B
2010: $4.9B
2011: $5.5B
2012: $5.5B
2013: $5.6B
2014: $4.8B
2015: $4.5B
2016: $4.7B
2017: $5.2B
2018: $5.9B
2019: $6.0B
2020: $4.7B
2021: $7.5B
2022: $6.2B
2023: $8.5B
2024: $8.2B
2025: $8.6B
$0$2.5B$5.0B$7.5B
07
11
15
19
23

Free cash flow

2007: $2.9B
2008: $3.8B
2009: $3.8B
2010: $4.2B
2011: $4.4B
2012: $3.9B
2013: $4.3B
2014: $4.1B
2015: $4.7B
2016: $4.2B
2017: $3.7B
2018: $4.2B
2019: $5.7B
2020: $4.6B
2021: $7.1B
2022: $5.5B
2023: $7.3B
2024: $6.7B
2025: $7.2B
$0$2.0B$4.0B$6.0B
07
11
15
19
23

Diluted shares (lower is better)

2007: 1.2K
2008: 1.1K
2009: 1.1K
2010: 1.1K
2011: 1.0K
2012: 1.0K
2013: 1.0K
2014: 988.54
2015: 946.74
2016: 863.15
2017: 817.35
2018: 787.38
2019: 766.63
2020: 751.80
2021: 751.80
2022: 741.30
2023: 732.30
2024: 721.90
2025: 716.40
0500.001.0K
07
11
15
19
23

Margins

10%20%30%07101316192225
Net marginFCF marginGross margin

Capital returned (dividends + buybacks)

2007: $5.7B
2008: $5.7B
2009: $5.0B
2010: $5.1B
2011: $6.0B
2012: $5.5B
2013: $4.9B
2014: $6.4B
2015: $9.3B
2016: $14.2B
2017: $7.8B
2018: $8.5B
2019: $8.6B
2020: $4.7B
2021: $4.8B
2022: $8.1B
2023: $7.6B
2024: $7.7B
2025: $7.2B
$0$5.0B$10.0B
07
11
15
19
23

Cash vs long-term debt

$0$20.0B$40.0B07101316192225
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q2'23: $6.5B
Q3'23: $6.7B
Q4'23: $6.4B
Q1'24: $6.2B
Q2'24: $6.5B
Q3'24: $6.9B
Q4'24: $6.4B
Q1'25: $6.0B
Q2'25: $6.8B
Q3'25: $7.1B
Q4'25: $7.0B
Q1'26: $6.5B
Q2'26: $7.1B
$0$2.0B$4.0B$6.0B
23
24
24
25
26

Net income by quarter

Q2'23: $2.3B
Q3'23: $2.3B
Q4'23: $2.0B
Q1'24: $1.9B
Q2'24: $2.0B
Q3'24: $2.3B
Q4'24: $2.0B
Q1'25: $1.9B
Q2'25: $2.3B
Q3'25: $2.3B
Q4'25: $2.2B
Q1'26: $2.0B
Q2'26: $2.4B
$0$1.0B$2.0B
23
24
24
25
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q2'26$7.1B+3.7%$2.4B+4.8%3.32$2.8B
Q1'26$6.5B+9.4%$2.0B+6.2%2.78$2.4B
Q4'25 *$7.0B+9.7%$2.2B+7.3%3.03$2.7B
Q3'25$7.1B+3.0%$2.3B+1.0%3.18$3.4B
Q2'25$6.8B+5.4%$2.3B+11.4%3.14$2.0B
Q1'25$6.0B−3.5%$1.9B−3.2%2.60$2.4B
Q4'24 *$6.4B−0.3%$2.0B−1.1%2.80$2.6B
Q3'24$6.9B+2.7%$2.3B−2.7%3.13$2.7B
Q2'24$6.5B−0.1%$2.0B−12.5%2.80$1.7B
Q1'24$6.2B+4.6%$1.9B+7.0%2.66$2.4B
Q4'23 *$6.4B+8.1%$2.0B+7.2%2.79$2.5B
Q3'23$6.7B+14.0%$2.3B+16.9%3.17$3.0B
Q2'23$6.5B+13.6%$2.3B+94.4%3.15$1.7B

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue+5.1%+7.0%+0.6%+0.7%
Operating cash flow+12.6%+11.0%+4.9%+3.5%
Free cash flow+9.4%+9.2%+4.3%+3.6%
EPS (diluted)+12.8%−92.8%−72.5%−57.6%
Equity−22.6%−13.5%——
LT debt+3.6%+2.6%+5.2%+8.7%
Diluted shares−1.1%−1.0%−2.7%−2.7%
Stock price+1.1%+5.1%+11.5%+10.5%

$100, 3 years ago

$103vs $176 in SPY

1.1% vs 20.7%/yr

$100, 5 years ago

$128vs $181 in SPY

5.1% vs 12.6%/yr

$100, 10 years ago

$298vs $412 in SPY

11.5% vs 15.2%/yr

$100, 15 years ago

$447vs $813 in SPY

10.5% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$0.00

$85.2K created / $16.4B retained

Last 10 years

$0.00

$132.2K created / $26.2B retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

27.6%

OCF ÷ (equity + debt)

OCF / EV yield

4.6%

MC vs 10× OCF

1.81

≤1 = priced under 10× OCF

Debt / FCF

5.6y

SBC / FCF

2.3%

Owner earnings

$7.0B

OCF − capex − SBC

OE yield

3.7%

Share count 5y

−2.9%

per year; negative = buybacks

Capital intensity

105.0%

net PP&E ÷ revenue

Sales efficiency

$0.43

new PP&E per $1 new revenue, 5y

Growth engine (5y): reinvested 29.2% of operating cash flow at an incremental return of 31.8% — an organically fundable growth rate of about 9.3% per year (growth ≈ reinvestment rate × incremental ROIC).

Checklist

19 of 26 checks pass · 73%. Checks with structurally missing inputs are excluded.

Growth & Consistency

5/7

  • Revenue growth

    7.0% · 5y CAGR ≥ 5%

    pass

  • EPS growth

    -92.8% · 5y CAGR ≥ 5%

    fail

  • FCF growth

    9.2% · 5y CAGR ≥ 5%

    pass

  • Revenue rises consistently

    5 of 9 · up in ≥ 7 of last 10 years

    fail

  • FCF consistently positive

    10 of 10 · positive in ≥ 8 of last 10 years

    pass

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    11.0% vs 7.0% · OCF CAGR ≥ 0.9× revenue CAGR

    pass

Profitability

5/6

  • Net margin

    31.9% · ≥ 8%

    pass

  • Operating margin

    46.1% · ≥ 10%

    pass

  • Gross margin stable or rising

    — · no drop > 2 pts over 3y

    na

  • Return on equity

    -478.1% · ≥ 12%

    fail

  • Cash ROIC

    27.6% · ≥ 12%

    pass

  • FCF margin

    26.7% · ≥ 5%

    pass

  • Earnings back their cash

    OCF $10.6B vs NI $8.6B · OCF ≥ net income (latest FY)

    pass

Balance Sheet

2/5

  • Debt payable from cash flow

    5.6y · LT debt ≤ 3× FCF

    fail

  • Cash cushion

    2% · cash ≥ 50% of LT debt

    fail

  • Leverage

    -22.32 · LT debt ≤ 1.5× equity

    pass

  • Equity positive and compounding

    −$1.8B · equity > 0 and grew over ~5y

    fail

  • Interest burden

    13% · interest ≤ 15% of operating income

    pass

Capital Allocation

4/4

  • Share count flat or shrinking

    -2.9% · ≤ +0.5%/yr over ~5y

    pass

  • Stock comp restrained

    2% · SBC ≤ 15% of FCF

    pass

  • Distributions funded by FCF

    100% · dividends + buybacks ≤ 100% of FCF

    pass

  • Repurchases are a habit

    10 of 10 · buybacks in ≥ 5 of last 10 years

    pass

Valuation Discipline

3/4

  • FCF yield

    3.8% · ≥ 3%

    pass

  • Earnings multiple

    22.2 · P/E ≤ 25

    pass

  • Price asks less than history delivered

    11.5% vs 4.3% · implied FCF growth ≤ historical FCF CAGR

    fail

  • Shareholder yield

    3.8% · dividends + buybacks ≥ 2% of market cap

    pass

Red flags

Mechanical checks — a flag is a question to investigate, not a verdict

Heavy debt load

Long-term debt exceeds 5 years of free cash flow.

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
202526,885—12,3938,56311.9510,5513,3657,1865,1152,05616577439,973-1,7910
202425,920—11,7128,22311.399,4472,7756,6724,8702,8241721,08538,424-3,7970
202325,494—11,6478,46911.569,6122,3577,2554,5333,0541754,57937,153-4,7070
202223,183—9,3716,1778.337,3871,8995,4884,1683,8961672,58435,904-6,0030
202123,223—10,3567,54510.049,1422,0407,1023,9198461394,70935,623-4,6010
202019,208—7,3244,7316,295,731.586,2651,6414,6243,753908923,44935,197-7,8250
201921,364—9,0706,0257,862,181.438,1222,3945,7283,5824,97611089934,118-8,2100
201821,258—8,8235,9247,522,950.256,9672,7424,2253,2565,20812586631,075-6,2580
201722,820—9,5535,1926,355,595.905,5511,8543,6983,0894,6861182,46429,536-3,2680
201624,622—7,7454,6875,427,698.866,0601,8214,2393,05811,1711311,22325,879-2,2040
201525,413—7,1464,5294,789,146.056,5391,8144,7253,2306,0991107,68624,1227,0880
201427,441—7,9494,7584,809,100.826,7302,5834,1473,2163,1991132,07814,93612,8530
201328,106—8,7645,5865,537,450.127,1212,8254,2963,1151,778892,79914,13016,0100
201227,567—8,6055,4655,347,879.766,9663,0493,9172,8972,615932,33613,63315,2940
201127,006—8,5305,5035,258,083.277,1502,7304,4202,6103,363862,33612,13414,3900
201024,075—7,4734,9464,569,643.526,3422,1364,2062,4082,699832,38711,49714,6340
200922,745—6,8414,5514,100,706.305,7511,9523,7992,2362,7971131,79610,56014,0340
200823,522—6,4434,3133,751,497.745,9172,1363,7821,8233,9191132,06310,18613,3830
200722,787—3,8792,3951,975,522.754,8761,9472,9301,7663,9431421,981—15,2800

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗