McDonald's Corporation operates and franchises McDonald's hamburger-focused restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company was founded in 1940 and is based in Oak Brook, Illinois.
MCD Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Mcdonalds Corp. To summarize, we found that Mcdonalds Corp ranked in the 20th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. As for the metrics that stood out in our discounted cash flow analysis of Mcdonalds Corp, consider:
Interest coverage, a measure of earnings relative to interest payments, is 6.32; that's higher than 71.25% of US stocks in the Consumer Cyclical sector that have positive free cash flow.
Mcdonalds Corp's weighted average cost of capital (WACC) is 8%; for context, that number is higher than just 12.97% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
GT, SCVL, FTDR, GME, and GPS can be thought of as valuation peers to MCD, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.
2020 was a challenging year for restaurant chains like McDonald's (NYSE: MCD) and BJ's Restaurants (NASDAQ: BJRI). Investors seem to believe both restaurants will rebound after the pandemic ends: Over the past 12 months, McDonald's stock has risen about 3%, while BJ's stock advanced 15%. McDonald's is the world's largest fast food chain with a market cap of almost $160 billion.