McDonald's Corporation
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
McDonald's remains a buy after a rare 30% share-price drawdown that has left the stock at $230.88 (as of 7 Oct) with an RSI of 24.7 — deeply oversold — while the franchise economics are intact: FY2025 operating margin of 46.1%, EPS growth of 4.9%, and free cash flow of $7.19B.
At 18.7x earnings versus a peer median of 19.6x and 14.5x EV/EBITDA versus a 17.4x median, the valuation now embeds much of the bad news, and Q2 2026 revenue grew 3.8% YoY with a modest EPS beat ($3.38 actual vs. $3.32 estimate). The selloff appears driven by macro forces — rising US 10Y Treasury yields pressuring the dividend-yield case — rather than fundamental deterioration, though the negative smart-money score (-0.06 as of the quarter ended 30 Jun) and analyst forecast cuts confirm institutional caution. This is a contrarian accumulation, not a momentum trade, and the call depends on US sales trends stabilizing.
What could go wrong
- Rate-driven de-rating persists. Per recent coverage, the decline is primarily attributed to rising US 10Y Treasury yields making risk-free income more attractive relative to MCD's dividend; if yields keep climbing, the multiple could compress further regardless of operations.
- US sales softness and analyst cuts. Analysts cut price forecasts on 6 Oct citing softer US sales trends, heavier investment, and execution risk around the value strategy — a demand problem the oversold technicals cannot fix.
- AI price-fixing litigation. A class action filed in early October 2026 alleges AI-powered menu price-fixing across nearly 14,000 US restaurants; adverse headlines or escalation could pressure the brand and pricing power.
- Institutional and insider selling. Smart-money score flipped negative (-0.06 as of 30 Jun) after five positive quarters, and insiders show net selling of 148,006 shares (~$47.07M) over 24 months with zero open-market acquisitions.
What would change my mind
Where this comes from: technicals, 7 Oct · FY25 fundamentals · results and earnings vs estimates, quarter to 4 Aug · peer comparison. Orin's read on MCD; not advice.
How has the share price moved?
Down 19.5% over twelve months, from $310.00 on 27 Oct 2025 to $249.47 at the Tue 27 Oct 2026 close. Its highest close in that time was $341.06 on 27 Feb 2026; the last close is 26.9% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 16.6M, on 23 Sep 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
On file
All MCD filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $15.0B | 0.2% |
| Vanguard Capital Management | $12.5B | 0.3% |
| State Street | $9.8B | 0.3% |
| JPMorgan Chase | $8.5B | 0.5% |
| Vanguard Portfolio Management | $5.1B | 0.2% |
| Geode Capital Management | $4.9B | 0.3% |
| Morgan Stanley | $4.1B | 0.2% |
| Bank of America | $3.0B | 0.2% |
| Norges Bank | $2.7B | 0.3% |
| T. Rowe Price Associates | $2.4B | 0.2% |
165 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 196 Form 4 filings; open-market trades net −$47.1M. Of the 50 on hand, 0 were open-market purchases and 11 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about MCD
Orin answers questions about MCD from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →How is it priced, against its own past and its sector?
Priced at 22.0× its last 12 months of profit (Thu 5 Nov close) — lower than in all 5 of its last 5 fiscal years (middle 25.5×); the typical Consumer Cyclical company on the NYSE is at 20.4×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 22.0×below usual | 25.5× | 20.4× |
| P/S | 7.08×below usual | 8.37× | — |
| EV/EBITDA | 17.0×below usual | 19.1× | — |
| P/B | below zero | — | — |
- P/B: below zero — it owes more than it owns on its books.
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $284 (from $230 to $350) — 14% above the Tue 27 Oct close price. That is their published opinion, not Orin's.
$284
$230 – $350 · +14% against the last close
- 16 buy or overweight
- 13 hold
- 2 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 22.0× its last 12 months of profit; the middle P/E of the 3 companies it is compared to that made a profit is 18.7×.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| MCDMcDonald's Corporation | $197B | 22.0× | 17.0× | 57.2% | 32.4% | n/m |
| CMGChipotle Mexican Grill, Inc. | $35B | 25.7× | 17.9× | 24.1% | 11.4% | 53% |
| DPZDomino's Pizza, Inc. | $10B | 17.1× | 14.8× | 40.0% | 12.0% | n/m |
| YUMYum! Brands, Inc. | $41B | 18.7× | 17.8× | 45.8% | 25.4% | n/m |
- MCD, DPZ, YUM: return on equity is not meaningful (n/m) — book value is below zero.
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 22.0× its last 12 months of profit (Thu 5 Nov close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now22.0×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Consumer Cyclical companies on the NYSE were priced at a typical 20.4× their yearly profit (Tue 27 Oct close).
- Now20.4×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $254 a share — 2% above the $249.31 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $254 | 2% above $249.31 |
| Levered | $190 | 24% below $249.31 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.