Bill Cara

McDonald’s (MCD) Quarterly Report for Maverick Investors

November 11, 2023,   $267.79

Business Overview:

  • The world’s largest fast-food chain operates, franchises, or licenses 40,275 fast-food restaurants globally.
  • Most (95%) of locations are operated by franchisees or affiliates, with the remaining managed by the company.
  • Foreign operations contributed significantly to systemwide sales (59%) and consolidated operating income (45%) in 2022.
  • Spun off Chipotle Mexican Grill (2006) and Boston Market (2007).
  • The workforce comprises 150,000+ employees in company-owned and operated restaurants. The number of McDonald’s employees has more than halved in the past six years.
  • There are 1.7 million McDonald’s workers in total, including employees of franchisees and affiliates.

Maverick Guidance:

  • Short-term technical buy/sell recommendation: MODERATELY OVERBOUGHT; BUY ON WEAKNESS
  • Long-term portfolio recommendation: BUY ON SHORT-TERM WEAKNESS
  • Maverick Investors can anticipate steady price gains, dividends, and share buybacks from this top-quality company.

Consideration for Maverick Portfolio:

  • MCD is appropriate for all risk profiles. The stock fits into all portfolios, from the Maverick CONSERVATIVE portfolio to the Maverick AGGRESSIVE GROWTH portfolio.

Market Guidance:

  • Technical Analysis (based on Technical Indicators and Moving Averages):
    • = Daily: STRONG BUY     Weekly: NEUTRAL
    • TipRanks =           Daily: NEUTRAL:          Weekly: BUY
  • Consensus Analyst Ratings— MarketBeat = MODERATE BUY, TipRanks = STRONG BUY
  • 27 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 22 Buy, 5 Hold, and ZERO Sell. (from TipRanks)
  • Based on 27 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $310.42, with a high forecast of $383.00 and a low forecast of $270.00. The average price target represents a 15.9% change from the last price of $267.79. (from TipRanks)
  • Dividend Yield: $1.67 per share paid quarterly to yield 2.28%.
  • Dividend growth for over 15 years. (from TipRanks)

Value Line Guidance:

  • Company Financial Strength Rating:  A++
  • Share Price Safety, Market Timing, Technical Rank: 1=best. 5=worst
  • Share Price Safety:         1 of 5
  • Market Timing:              3 of 5
  • Technical Rank:             3 of 5
  • Beta:                                 0.90
  • Stock’s Price Stability:                                                              100/100
  • Price Growth Persistence:                                                         95/100
  • Earnings Predictability:                                                             80/100
  • Projected Average Annual PE:                                                       25.5
  • Average Annual Sales Growth in the past 5 years:                +0.5%
  • Average Annual Sales Growth for the next 5 years:              +6.5%
  • Average Annual Cash Flow Growth in the past 5 years:       +7.5%
  • Average Annual Cash Flow Growth for the next 5 years:     +9.0%
  • Average Annual Earnings Growth in the past 5 years:         +8.0%
  • Average Annual Earnings Growth for the next 5 years:   +10.50%
  • Average Annual Dividend Growth in the past 5 years:        +8.0%
  • Average Annual Dividend Growth next 5 years:                   +8.5%
  • Projected Average Annual Dividend Yield in 3 to 5 years:  +2.2%

Financial Performance

  • 10-year Average Annual Total Return: +13.60% (through Nov 10, 2023)(8th best of the Dow 30)
  • EPS
    • 2020:       $6.05
    • 2021:        $9.28
    • 2022:     $10.10
    • 2023:    e$11.75
    • 2024:  e$12.50  (from Value Line Quarterly Report)
  • Current PE:       23.6  (FinViz)
  • Forward PE:      21.5   (FinViz)
  • PEG Ratio:        2.48   (FinViz)
  • Beta:                  0.69    (FinViz)

Quarterly Reports Summaries (including Revenue, Cash Flow, Earnings):

3Q2023 Quarterly Report (September) (Released Oct. 30)

McDonald’s 3Q2023 Earnings Report Highlights:

  • Global Systemwide sales increased by +11%.
  • Global comparable sales grew by nearly +9% across all segments.
  • Digital Systemwide sales in the top six markets amounted to nearly $9 billion, representing over 40% of their Systemwide sales.

3Q2023 Quarter Financials:

  • Global comparable sales increased by +8.8%.
  • The US segment increased by +8.1%.
  • The International Operated Markets segment increased by +8.3%.
  • The International Developmental Licensed Markets segment increased by +10.5%.
  • Consolidated revenues increased by +14%.
  • Diluted earnings per share was $3.17, reflecting an 18% increase.

Key Performance Drivers:

  • The US segment benefited from strong average check growth, effective marketing campaigns, and digital and delivery growth.
  • Strong comparable sales in key markets like the UK, Germany, and Canada drove international Operated Markets.
  • International Developmental Licensed Markets reflected strong comparable sales across all geographic regions.

Dividends and Financial Metrics:

  • A 10% increase in quarterly cash dividend to $1.67 per share was declared.
  • Operating income increased by +16%.
  • Net income increased by +17%.

2Q2023 Quarterly Report (June)

  • McDonald’s continues to focus on multiple strategies to increase revenues despite global economic challenges.
  • Strong year-over-year revenue gains in the first half of 2023 across domestic, foreign, and developmental licensing markets.
  • Marketing efforts, including the return of the Grimace character, contributed to positive drivers like customer traffic, pricing, store upgrades, and menu enhancements.
  • Comparable-store growth eased slightly due to inflation’s impact on consumer budgets; management warned of slower growth in the second half of 2023.
  • Menu improvements, especially in chicken offerings, store openings, delivery expansion, and digital mobile ordering adoption, are expected to support top-line growth.
  • Estimated revenue improvement of 10% to $25.5 billion in 2023, with a gain of 6% to $27.0 billion in 2024.
  • Inflation is impacting margins, particularly in Europe, but management is focused on offering value and supporting franchisee productivity via technology.
  • Positive share earnings momentum, with adjusted per-share earnings expected to advance 16% in 2023 and 6%-7% in 2024.
  • McDonald’s provides steady total returns, with cash flow generation and debt financing aiding international expansion and market share growth.
  • Share buybacks, dividend hikes, and steady stock price appreciation reward investors.

1Q2023 Quarterly Report (March)

  • Revenues are increasing as COVID-19 cases decline, especially in China, which has reopened as an important market.
  • Global comparable-store sales are projected to rise in the low-double-digits in 2023, driven by volume, selective price hikes, and an enhanced menu.
  • Careful expansion of store count and support for franchisees, along with digital ordering and delivery, contributing to top-line growth.
  • The strong US dollar previously restrained franchise revenue growth, but the impact is expected to lessen.
  • Estimated consolidated revenue increase of 5%-6% to $24.5 billion in 2023, with a further gain of 6% to $26.0 billion in 2024.
  • Management-led initiatives, including international expansion, improved service and ambiance, and process standardization, helped offset elevated expenses.
  • Expected share earnings growth from $10.10 in 2022 to $11.25 in 2023 and $12.00 in 2024.
  • Positive share price trend, historically reliable rising total returns, solid financial strength, and limited risk profile.
  • McDonald’s ranked 1 for Safety, indicating high financial strength and price stability.

4Q2022 Quarterly Report (December)

  • 2022 Revenues: Dipped below the prior year due to negative foreign currency translation, a strong U.S. dollar, and cautious pricing strategies amidst rising inflation.
  • 2022 Challenges: COVID-19 shutdowns in China and conservative European spending also impacted top-line performance.
  • 2023 Outlook: Optimism for growth under the “Accelerating the Arches” strategy, focusing on store count expansion, operational efficiency, digital services, and delivery.
  • Revenue Growth Projection: Anticipate 3%-4% growth to $24.0 billion in 2023 and a stronger 6% advance to $25.5 billion in 2024.
  • Earnings Strength: Expect strengthening of earnings, displaying momentum in sales, international markets, and comparable store receipts.
  • Operating Leverage: Operating efficiency efforts and strategic enhancements are expected to provide leverage against inflationary pressures.
  • Profitability Factors: Wage and ingredients inflation, along with currency exchange, may restrain profitability, but service and process enhancements are seen as offsets.
  • Earnings Projection: Share earnings, adjusted for special items, are forecasted to increase 5%-6% to $10.65 in 2023 and another 8%-9% to $11.55 in 2024.
  • Stock Performance: McDonald’s is recognized for delivering positive total returns, steady price gains, generous dividends, and share buybacks.

The 3-to-5-year Operational and Financial Outlook:

  • McDonald’s remains confident in its future and the strategic direction of its business.
  • The 3-to-5-year outlook indicates continued strong growth in revenue and earnings.
  • McDonald’s employs various strategies to boost revenues despite global economic challenges.
  • Marketing efforts, including the return of the Grimace character, positively impacted customer traffic, pricing, store upgrades, and menu enhancements.
  • Menu improvements, particularly in chicken offerings, store openings, delivery expansion, and digital mobile ordering adoption, are expected to support top-line growth.
  • Despite recent market stress, McDonald’s geographical diversification positions it well to weather economic slowdowns.
  • The company provides steady total returns, leveraging cash flow generation, debt financing, and international expansion for market share growth.
  • The reduced share price is considered an opportunity for conservative investors with a long-term view, especially for the years 2026-2028.

Company SWOT Analysis:

  • Consider whether changes in any one or more of these factors are a reason to invest or sell your investment in this company. There is no need to be guided by self-conflicted and highly biased Wall Street.  

Internal Strategic Factors:


Brand Recognition:

    • Globally recognized with its iconic golden arches logo and popular slogan, “I’m Lovin’ It.”
    • Effective branding and marketing efforts create a strong, positive brand image.

Global Presence:

    • Over 38,000 locations in 100+ countries, facilitating a broad customer base and economies of scale.

Strong Franchise System:

    • Utilizes a successful franchise model for rapid expansion.
    • A well-established franchise system ensures consistency and quality while minimizing risks and costs.

Financial Strength and Real Estate Empire:

    • A multi-billion real estate empire provides a strong financial foundation.

Efficient Operations:

    • Known for highly efficient operations with streamlined processes.
    • Systems in place enable quick and consistent service, minimizing wait times and enhancing the customer experience.

Technological Innovation:

    • Introducing new products like McCafé coffee drinks, all-day breakfast, and McCrispy Sandwiches.
    • Utilizing revolutionary technology to enhance products and services.

Culinary Appeal:

    • Renowned for tasty offerings, especially French fries.
    • Fast foods are considered better in taste than competitors.

Strategic Acquisition for Personalized Marketing:

    • Acquisition of ‘Dynamic Yield’ for personalized marketing and customizations.
    • Progressing towards tailored customer experiences.


Health Concerns:

    • Criticism for nutritional value and links to health issues.
    • Efforts to introduce healthier options, but concerns persist.

Negative Public Perception:

    • Criticism for labor practices, including low wages.
    • A negative public image led to protests and calls for boycotts.

Dependence on Franchisees:

    • High dependence on franchisees for revenue and growth.
    • Challenges in ensuring consistency and quality across all locations.

Limited Menu Appeal:

    • Perceived limitation in menu variety compared to competitors.
    • The breakfast menu has lost its charm over the years due to the lack of variation.
    • Reliance on signature items may impact customer preferences.

Environmental Impact:

    • Criticism for environmental practices, including single-use plastics.
    • Concerns were raised about the contribution to deforestation through sourcing beef and palm oil.

The Franchise business model:

    • It may show a greater impact with the passing of time. The interruption in supply-chain business models can also affect the company’s growth.

Employee job dissatisfaction:

    • Thousands of employees are largely dissatisfied. It may affect their efficiency and further affect the food chain’s service.

External Strategic Factors:


International Expansion:

    • Untapped markets in Asia and Africa present opportunities.
    • Emerging demand for fast food in these regions.

Health and Wellness Trends:

    • Opportunity to introduce healthier menu options.
    • Leverage the supply chain for sustainable and environmentally friendly choices.

Digital Technology:

    • Heavy investment in digital tech, including mobile ordering.
    • Potential for further innovation and data leverage for menu and marketing enhancement.

Delivery and Convenience:

    • Expand delivery offerings through third-party services.
    • Explore partnerships with popular delivery platforms.

Partnership and Collaborations:

    • Collaborate with other brands or chefs for innovative menu offerings.
    • Differentiate the company and appeal to new customer segments.

Affordable Menu Strategies:

    • The launch of the “$1, $2, $3” menu and the “2 for $5 Mix and match deal” attracts budget-conscious customers.

Asian Market Expansion:

    • Opportunity for further expansion in Asian countries by tailoring menus to local preferences.

Brand Image Rebuilding:

    • Work on rebuilding the brand image to counteract negative publicity.
    • Focus on employee satisfaction.

Delivery Partnership:

    • Initiated a partnership with UberEats to serve customers unable to visit a location.


Environmental, Regulatory, and Legal Challenges:

    • Faces challenges related to labor, food safety, and environmental regulations.
    • There is immense pressure to improve practices to minimize waste production, creating a negative impression.
    • Regulatory changes or legal issues can affect operations and profitability.

Risky Technological Investments:

    • McDonald’s risky investments in technological initiatives may severely affect future growth.

Resistance to Change:

    • Being considered old-school may impact the business, especially in adapting to changing food habits.
    • Cultural threats while operating in different countries.


    • Intense competition in the fast-food industry.
    • Competitors from various chains and emerging trends like healthier options.

Changing Consumer Preferences:

    • Risk of the menu becoming less appealing.
    • Adaptation to health and environmental trends is crucial.

Economic Factors:

    • Impact from inflation, consumer spending changes, and currency fluctuations.
    • Economic downturns in key markets pose risks.

Supply Chain Disruptions:

    • Dependency on a complex supply chain.
    • Disruptions like natural disasters can impact ingredient availability and costs.
    • There is immense pressure to improve practices to minimize waste production, creating a negative impression.

FinViz Snapshot:

10-Year Historical Price Chart: (from


Point & Figure Chart: (from,PWTAWANRNO[PA][D][F1!3!!!2!20]


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