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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Mcdonald'S Corporation (XNYS:MCD) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
MCD
Name:
MCDONALD'S CORPORATION (XNYS:MCD)
Sector:
1.73B
Industry:
Restaurants
CEO:
Mr. Christopher Kempczinski
Total Employees:
200,000
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -76.34% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF MCDONALD'S CORPORATION(MCD) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND RESTAURANTS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
254.51
One Month Price Target:
$255.33
Six Month Price Target :
$259.4
Likely Price in One Year's Time:
Ticker:
$264.29
Likely Trading Range Today Under (Normal Volatility)
$253.89
Price Upper limit ($) :
$255.41
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$245.45
This week:
$234.25
This month :
$213.99
Other Primary facts
Market Cap:
187.16B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
735.72M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
18.13%
-15.88%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$296.54
$277.12
$212.48
$231.90
Medium risk (<10%) entry points
Buy Call
Sell Call
$270.80
Buy Put:
Sell Put:
$266.65
$238.17
$242.37
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
MCD
Sharpe Ratio:
2.59%
Comparison:
MCD, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 57.13% higher than the industry
& ratio is 13.62% higher than the market/S&P 500 average
Average Returns/Yield of
MCD
Daily returns:
0.05%
Weekly returns:
0.27%
Monthly returns:
1.09%
Yearly returns:
16.01%
Comparison of returns:
Average annual returns/yield (last 3 years) is -18.43% below industry average
Classification:
MCD, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.55
Statistical test of Returns:
MCD has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.76%
Weekly Volatility:
3.94%
Monthly Volatility:
7.87%
Yearly Volatility:
27.27%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.19%
Volatility in last five trading days has been -32.42% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.56%
Weekly VaR:
-7.96%
Monthly VaR:
-15.92%
How Much Can the price of
MCD
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-13%
Worst case (decline):
-55.16%
This translates to price declining to:
$220.26
This translates to price declining to:
$114.13
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
MCD is a 12.38% riskier investment compared to the market/S&P 500 & is -3.73% less risky than Nasdaq(IXIC)
Risk (measured by volatility) is -49.60% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
MCD
Beta in relation to market/S&P 500--0.57
Expected beta in 1 year's time:
0.561
Expected beta in 3 year's time:
0.793
Unlevered (debt free) Beta:
-0.106
Beta in relation to Nasdaq (XNAS):
0.61
Beta in relation to all global stocks::
0.733
Beta Comparison & Analysis
Beta of competitors/peers::
1.086
Beta is -47.33% lower than peers
Average Industry Beta:
1.354
Beta is -57.76% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
-
-
Alpha provided | Alpha Analysis
Alpha provided:
0.060
Alpha is 66.95% above industry average alpha yield
Alpha is 382% higher than market/& is unsustainably high
Analysis of Cost of Capital of
MCD
Equity cost of capital:
0.071
Equity cost of capital is -43.11% below industry mean WACC
Unlevered (without debt) cost of capital:
-1.31%
Before-tax cost of debt:
2.47%
After-tax cost of debt:
1.95%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.95%
WACC is -43.77% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$32.30
Revenue growth rate per share of (3Y):
-31.26
Annual revenue growth rate is -31.53% below industry average
EPS:
$9.47
Expected Annual growth rate of EPS (3Y):
7.54%
Expected future EPS growth rate is 119.64% higher than the Restaurants industry
Free cash flow (FCF) per share:
$9.30
Balance sheet equity growth per share: 23.55%
Equity growth rate per share is -343.49% lower than the industry
Debt per share
$63.69
EBITDA per share
$15.48
Valuation Analysis Today of
MCD
P/E Ratio:
31.36
P/E Ratio of Competitors/Peers:
14.78
P/E ratio is 112.19% higher than main peers & is 32.54% higher than the industry
Stock price/value with industry average P/E ratio: $224.07
MCD is 13.59% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $108.15
Present value of the expected future dividends only: $90.70
P/S (Price to Sales ratio):
7.88
Price to sales ratio is 141.54% above the industry mean
P/B (Price to book value ratio):
-31.26
Price to free cash flow: 27.36
Price to free cash flow ratio is -45.12% lower than the industry
Net income growth rate (3Y):
30.74%
Net income growth rate is -82.34% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 14.41%
Dividend yeild: 2.13%
Previous Dividend: $1.38
Previous adjusted dividend: $1.38
Previous Dividend: $5.43
Expected next dividend best case: $1.43
Expected next dividend worst case: $1.33
Average dividend payment (long-term): $1.30
Average dividend increase/decrease (growth rate) % per period: 1.02%
Expected next dividend payment date: 19/09/2022
Expected next dividend record date: 09/05/2022
-
Previous dividend payment date: 20/06/2022
Previous dividend record date: 06/06/2022
-
Dividend History:
2022-06-03--$1.38
2021-11-30--$1.38
2021-05-28--$1.29
2022-02-28--$1.38
2021-08-31--$1.29
2021-02-26--$1.29
Dividend growth rate is -144.81% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
-782.21%
Net debt to equity ratio:
-754.77%
Debt to assets ratio:
92.10%
Net debt to assets ratio:
88.87%
Debt-to-asset ratio is -41.56% below industry average
Ability to repay debt:
Interest coverage ratio:
9.71
Interest coverage ratio is -45.09% less than industry average
Looking forward:
Debt growth rate:
-5.48%
Annual debt growth is -115% lower than industry average debt growth rate
Debt repayment rate in last quarter: 2.80%
Analysis of Key Statistics
Correlation of price movement with the market:
0.737
Statistical significance of correlation:
MCD has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.517
Stock price is 42.49% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.517
Correlation of price movement with Nasdaq (^IXIC):
0.026
Covariance of price movement with the market:
0.027
Kurtosis
30.121
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.492
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
MCD
Gross Profit Margin Ratio:
218%
Operating Profit Margin Ratio:
43.71%
Operating profit margin is 364.96% higher than the industry
Net Profit Margin Ratio:
218%
Effective Tax Rate:
18.40%
Effective tax rate is 5.96% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
-118.72%
Return on equity (ROE) is -37193.51% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
13.98%
Return on assets (ROA) is -1.52% lower than the industry
Financial Leverage:
12.7x
Current Ratio:
1.1
Current ratio is -2.10% below industry average
Cash Conversion Cycle (days):
-4.6
Cash conversion cycle is -113.87% below industry average
The remaining useful life of property plant & equipment is: 5.9 years
Stock based compensation to net income ratio:
0.76%
In-depth Efficiency Analysis
Revenue generated per employee:
118.8K
Each employee generates 6% more revenue than industry average revenue per employee
EBITDA generated per employee:
56.9K
Each employee generates 124% more EBITDA than industry average revenue per employee
Profit generated per employee:
35.6K
Each employee generates 149% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
8.7K
Each employee generates 258% more free cash flow than industry average revenue per employee
Assets/Capital per employee
231.1K
Each employee generates 258% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
MCD
LOWE'S COMPANIES, INC. (XNYS:LOW)
NIKE, INC. (XNYS:NKE)
TM
FORD MOTOR COMPANY (XNYS:F)
GENERAL MOTORS COMPANY (XNYS:GM)
THE TJX COMPANIES, INC. (XNYS:TJX)
Stellantis NV (XNYS:STLA)
Ferrari NV (XNYS:RACE)
COMCAST HOLDINGS CORPORATION (XNYS:CCZ)
Current Analyst Ratings
Strong buy�33%
Buy�63%
Hold�42%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
23.76B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
10.80B
12.96B
-
-
2.47B
-
346.40M
2.82B
10.00M
1.17B
1.50B
11.39B
10.39B
7.11B
8.72B
1.60B
7.11B
Statement of Cash Flow
Date:
Period:
479.70M
Differed Income Tax :
- 50500.00K
Stock Based Compensation :
54.30M
Change in Working Capital :
473.40M
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
72.00M
Net Cash Provided by Operating Activities:
2.13B
Investments in PP&E:
-
Net Acquisitions:
- 70200.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
2.34B
-
2.34B
1.67B
49.60M
597.00M
4.66B
37.81B
2.81B
-
1.18B
-
4.42B
46.22B
-
50.88B
718.60M
691.90M
864.20M
-
2.82B
4.23B
46.86B
2.98B
52.63B
-
56.87B
16.60M
57.61B
- 2641900.0K
- 60979500.00K
March 31, 2022 at 6:00:00 AM
13.62B
- 5990800.00K
50.88B
-
47.55B
45.2B
-
- 484300.00K
- 554500.00K
- 1350600.00K
-
- 1506500.00K
- 1025100.00K
52.10M
- 3830100.00K
- 122200.00K
- 2373500.00K
2.34B
4.71B
2.13B
- 401200.00K
1.73B
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
MCD
2023
2024
2025
2026
2027
$282.65
$293.51
$304.79
$316.50
$328.67