MCD — Mcdonalds Corp
Snapshot dated October 6, 2026.
McDonald's Corporation operates and franchises a global system of quick-service restaurants, primarily functioning as a real estate and brand licensing entity rather than a direct operator of every location. The company generates revenue through rent, royalties, and fees paid by franchisees who operate the vast majority of its more than 40,000 restaurant locations across over 100 countries. Its business model relies on maintaining consistent menu offerings, such as the Big Mac and McCafé beverage line, supported by a supply chain that serves millions of customers daily. Segmented primarily by geographic markets including the United States, International Operated Markets, and International Developmental Licensed Markets, the firm balances direct ownership of store assets with the capital-light franchising model. It maintains a dominant position in the fast-food industry, frequently competing against major chains like Burger King and Wendy's for market share. Recently, the company has emphasized the acceleration of its Accelerating the Arches strategy, which focuses on digital integration, delivery expansion, and the modernization of its drive-thru and ordering technology.
Fair Value / Share
$157.09
Price on October 6, 2026
$233.86
Upside to fair value
-32.83%
Data by Equibles and SEC filings. Figures are as of October 6, 2026 and are not live.
Earnings Yield
Earnings Yield shows how much profit a company generates relative to its share price. EPS ÷ Stock Price.
Stock Price
$233.86
Market Cap
$166,297,846,000
Net Income (TTM)
$8,787,000,000
Diluted Shares
711.1 million
EPS (TTM)
$12.36
Earnings Yield
5.28%
5.3% vs ~4-5% bonds · Restaurants median 4.1% (20 companies, excl. MCD)
Show the 20 companies behind the medianHide the companies behind the median
| Company | Net income (TTM) | Market cap | Earnings yield |
|---|---|---|---|
| SBUXStarbucks Corp | $2B | $108.1B | 1.8% |
| CMGChipotle Mexican Grill Inc | $1.4B | $40.1B | 3.5% |
| YUMYum Brands Inc | $2.2B | $38.2B | 5.8% |
| QSRRestaurant Brands International Inc. | $1.7B | $32.6B | 5.2% |
| DRIDarden Restaurants Inc | $1.2B | $22.8B | 5.2% |
| YUMCYum China Holdings, Inc. | $975M | $14.1B | 6.9% |
| DPZDominos Pizza Inc | $596.5M | $9.9B | 6.0% |
| EATBrinker International, Inc | $487M | $8.2B | 5.9% |
| BROSDutch Bros Inc. | $92.4M | $6.7B | 1.4% |
| CAVACava Group, Inc. | $66.3M | $6.2B | 1.1% |
| WINGWingstop Inc. | $116.4M | $2.7B | 4.3% |
| ARCOArcos Dorados Holdings Inc. | $234.3M | $1.5B | 15.6% |
| BJRIBJs RESTAURANTS INC | $40.9M | $1.3B | 3.2% |
| WENWendy's Co | $126.1M | $1.2B | 10.1% |
| SGSweetgreen, Inc. | $13.7M | $980.9M | 1.4% |
| BLMNBloomin' Brands, Inc. | $27.7M | $690.1M | 4.0% |
| PZZAPapa Johns International Inc | $27.6M | $643.6M | 4.3% |
| FWRGFirst Watch Restaurant Group, Inc. | $17.8M | $625.8M | 2.8% |
| KRUSKura Sushi USA, Inc. | -$2.1M | $472.8M | -0.4% |
| BRCBBlack Rock Coffee Bar, Inc. | $1.5M | $359.5M | 0.4% |
Peer yields are net income ÷ market cap from the Equibles screener, as of 2026-10-06; MCD's own figure is EPS ÷ price from SEC filings, so small gaps between the two methods are expected. Data by Equibles.
AI Analysis
McDonald's Corporation currently exhibits an earnings yield of 5.28%, calculated by dividing its EPS of $12.36 by its stock price of $233.86. This figure sits above the roughly 4-5% return available from a safe, guaranteed alternative like a bond. This yield is also above the 4.15% median earnings yield observed across 20 companies in the Restaurants industry by 1.1 percentage points. Mechanically, this yield implies that for every dollar of the current share price, the company generates $0.0528 in annual earnings. A higher yield relative to safe alternatives suggests that the market price assigns a lower premium to the company's current earnings per share. This measure does not account for the company's future growth trajectory, debt levels, or changes in operating margins.
Return on Capital
EBIT ÷ (Net Working Capital + Net Fixed Assets) — how efficiently the business turns capital into profit.
EBIT (TTM)
$12,805,000,000
Net Working Capital
-$495,000,000
Net Fixed Assets
$28,479,000,000
Invested Capital
$27,984,000,000
Return on Capital
45.76%
AI Analysis
McDonald's Corp generates a Return on Capital of 45.76%. This figure is derived by taking the company's EBIT of $12.8B and dividing it by its invested capital of $28B, which comprises $28.5B in net fixed assets offset by $495M in net working capital. This performance sits well above the 30% benchmark typically used to indicate an efficient use of capital. Such a reading suggests that the business is generating significant profit relative to the tangible operating capital required to maintain its operations. However, this measure does not account for the specific industry context or capital intensity; different sectors naturally require varying levels of fixed asset investment to operate. A decline in this percentage would require either a reduction in operating profit or an increase in the capital base—such as through significant new investments in property and equipment—without a corresponding rise in earnings.
Acquirer's Multiple
Enterprise Value ÷ Operating Earnings — how many years of operating earnings it would take to buy the whole business.
| Company | Operating earnings | Enterprise value | Multiple |
|---|---|---|---|
| MCDMcdonalds Corp | $12.8B | $205.3B | 16.0x |
| QSRRestaurant Brands International Inc. | $2.6B | $45.9B | 17.6x |
| YUMYum Brands Inc | $2.7B | $52.4B | 19.4x |
Where MCD sits: 16.0x against a peer median of 18.5x (peers: 17.6x and 19.4x) — 13.3% below the median.
Show the enterprise value bridge for each companyHide the enterprise value bridge
MCD
Debt $39.9B. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $14.7B of operating lease liabilities as of 2026-06-30 ($14B non-current, $690M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
QSR
Named as a competitor: operates competing global fast-food burger and quick-service chains like Burger King
Debt $13.3B. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $2.1B of operating lease liabilities as of 2026-06-30 ($1.9B non-current, $212M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
YUM
Named as a competitor: competes in global quick-service fried chicken, pizza, and Mexican food categories
Debt $15.1B. This is reported total debt, including $146M of finance lease obligations ($146M in the filing). Finance leases are counted as debt because they are a borrowing in substance — the company has committed to fixed payments for an asset it effectively owns.
Operating earnings — MCD
AI Analysis
McDonald's Corp (MCD) has an Acquirer's Multiple of 16.0x, derived from an enterprise value of $205.3B and operating earnings of $12.8B. Among the competitors, QSR trades at an Acquirer's Multiple of 17.6x, based on an enterprise value of $45.9B and operating earnings of $2.6B, while YUM trades at 19.4x, calculated from an enterprise value of $52.4B and operating earnings of $2.7B. Comparing these figures, YUM has the highest multiple, and MCD has the lowest. MCD stands at 16.0x against a peer median of 18.5x (peers: 17.6x and 19.4x) — 13.3% below the median. Differences in this comparison are driven by variations in debt levels or operating margins; the gap between these companies would close if the market's assessment of their future operating earning power or current capital structures were to align more closely.
FS-Score
A 10-check read on financial health, across profitability, balance-sheet stability and operating momentum.
FS-Score
5/10
Decent score — worth a deeper look before investing.
Section 1
Current Profitability
3/3
Profitability is Strong, as the business is currently generating positive returns and cash flow from its asset base while maintaining high-quality earnings.
- Return on Assets is positive at 14.39%
- Free Cash Flow to Total Assets is positive at 12.07%
- Accruals show cash flow from operations is 1.23 times net income
This section reflects current generation of cash and profit; the score would only decline if the company shifted to an accounting loss or negative free cash flow.
Return on Assets (ROA > 0)
PassFree Cash Flow to Total Assets (FCFTA > 0)
PassAccruals (CFO / Net Income > 1)
PassSection 2
Stability
2/3
Stability is Mixed, reflecting a reduction in both long-term debt and the share count alongside a decline in the current ratio.
- Leverage decreased with the ratio moving from 0.7 down to 0.67
- Liquidity declined as the current ratio dropped from 1.19 to 0.95
- Net dilution was negative as weighted-average shares fell from 721.9 million to 716.4 million
The score reflects a healthier debt-to-asset profile and share buybacks, but indicates a tighter window for meeting short-term obligations.
Change in Leverage (↓ or unchanged)
PassChange in Liquidity (↑ Current Ratio)
FailNet Dilution (annual diluted weighted-average shares, this year vs last)
PassSection 3
Recent Operational Improvements
0/4
Recent Operational Improvements are Weak, as several key efficiency and return metrics have softened compared to the previous year.
- Return on Assets fell from 14.90% to 14.39%
- Free Cash Flow to Total Assets decreased from 12.09% to 12.07%
- Change in Gross Margin is not available
- Asset Turnover slowed from 0.47 to 0.45
The lack of points here indicates the business is currently operating with slightly less efficiency than it did in the prior period.
Change in ROA (↑)
FailChange in FCFTA (↑)
FailChange in Gross Margin (↑)
—Change in Asset Turnover (↑)
FailFramework conclusion
The total score of 5/10 indicates a result that is solid but mixed, suggesting that while the company is currently profitable and generating cash, its operational momentum has stalled. This score identifies a business that is financially stable in the present but is not currently improving its efficiency or return profile. Consequently, if the stock is priced at a discount, this reading suggests that the discount may be tied to a recent cooling of operational performance rather than a fundamental threat to the company's solvency.
- Profitability is supported by a 14.39% Return on Assets
- Earnings quality is high with cash flow exceeding net income by a factor of 1.23
- Liquidity has weakened as the current ratio fell to 0.95
- Asset Turnover has slowed to 0.45, indicating less revenue generated per dollar of assets
Intrinsic Value (DCF)
A 10-year discounted cash flow, then the bridge from business value to value per share.
Reported cash flow → unlevered free cash flow
Free Cash Flow (reported)
$7.8B
+ After-Tax Interest Expense
$1.3B
= Unlevered Free Cash Flow
$9B
Business value (10-year DCF)
PV of Years 1–10
$65.2B
PV of Terminal Value
$85.6B
= Business Value
$150.7B
Terminal value share
56.77%
Business value → share value
Intrinsic Value (business)
$150.7B
+ Cash & Equivalents
$822M
− Debt
$39.9B
= Shareholders' Value
$111.7B
÷ Diluted Shares
711.1 million
= Fair Value / Share
$157.09
Divided by 711.1 million diluted shares — the weighted-average diluted count from the most recent quarterly income statement, for the quarter ended 2026-06-30.
The company's filing tags its diluted share count in millions (711.1 as filed), so it is read as 711.1 million — the count at which the filing's own net income gives back its reported diluted EPS.
Risk bucket → discount rate
low (9%)
Year-1 FCF
$9B
Trailing twelve months.
FY2023 $7.3B · FY2024 $6.7B · FY2025 $7.2B
Growth rate (yrs 1–10)
3%
Terminal growth (after yr 10)
3%
Assumed FCF growth: 3%/yr · Revenue growth: last FY +3.7% · 5-yr avg +7.0%/yr
Revenue: FY2020 $19.2B · FY2021 $23.2B · FY2022 $23.2B · FY2023 $25.5B · FY2024 $25.9B · FY2025 $26.9B
The growth assumption applies to free cash flow, not revenue, so free cash flow can grow faster than sales if margins recover.
AI Analysis
The valuation of McDonald's reflects its status as a defensive, heavily franchised business. Because the company generates durable rent and royalty income backed by a vast real estate portfolio and recession-resistant pricing, it is placed in the low-risk bucket, utilizing a 9% discount rate. This rate serves as the hurdle for the capital required to produce future cash flows. For the ten-year forecast, we begin with a fixed Year-1 free cash flow of $9B. A 3% growth rate is applied to this base, recognizing that recent free cash flow history has been largely flat, with figures moving from $7.1 billion in 2021 to $7.2 billion in 2025. Given the industry's global market saturation and intense competition, this 3% rate reflects modest incremental expansion rather than rapid scaling. A 3% terminal growth rate is also utilized, which is fixed for all companies in this framework to align with long-run economic expectations. The valuation is derived by discounting these cash flows to the present, adding cash, and subtracting the company's $39.9B in debt to arrive at a value for shareholders. Divided by 711.1 million shares, this results in a fair value per share of $157.09. With the current market price at $233.86, the upside to fair value is -32.83%. As the market price currently sits above the calculated fair value, there is no margin of safety available. If the inputs were to change, the discount rate would likely have the most significant impact on the final result; as a measure of the risk-adjusted return required by capital providers, even small adjustments to this rate compound heavily over the ten-year forecast and terminal period.
Overall Verdict
How the five signals above stack up together, then the full synthesis.
Earnings Yield
5.28% vs ~4-5% bond-yield benchmark
Return on Capital
45.76% ROC vs ~30% benchmark
Acquirer's Multiple
16.0x against a peer median of 18.5x (peers: 17.6x and 19.4x) — 13.3% below the median.
FS-Score
5/10 — Solid but mixed
Intrinsic Value
-32.83% upside to fair value
These five checks measure two distinct aspects of the business: its operational efficiency and its relative market pricing. Return on Capital at 45.76% and the Acquirer's Multiple of 16.0x reflect strong operational performance relative to benchmarks and peers. Conversely, the Earnings Yield of 5.28% sits in a middle zone near bond yields, while the FS-Score of 5/10 indicates mixed financial stability. The most prominent tension exists between the high operational quality measures and the Intrinsic Value check, which shows a -32.83% upside to fair value, suggesting the current market price sits above the calculated intrinsic estimate. While the operational metrics suggest a company that utilizes capital effectively, the valuation metrics indicate that this performance is already reflected in the current pricing. A significant change in the Intrinsic Value result—specifically the gap between the current price and the fair value estimate—would be the most impactful shift for the overall profile of these measurements.
Comments
Notes from readers on MCD — one each. Comments stay with the company, so they carry across to a later snapshot, and each one shows the date it was written.
Loading comments…