McDonald's Trades Near 52-Week High: Can the Stock Keep Sizzling?

Globe and Mail

16-05-2025

Shares of McDonald's Corporation MCD ended yesterday's session at $314.48, just 3.6% shy of its 52-week high, a testament to the market's bullish sentiment. Over the past six months, MCD has climbed 8% against the industry 's decline of 1.6%.
Adding to the positive technical picture, McDonald's stock trades above its 50-day simple moving average (SMA) of $310.53, a key indicator of sustained upward momentum. This outperformance highlights growing investor confidence in the Golden Arches' resilient business model and steady growth trajectory.
In the past six months, other industry players like Starbucks Corporation SBUX, Yum! Brands, Inc. YUM and Restaurant Brands International Inc. QSR have declined 13.1%, and gained 9.7% and 1.1%, respectively.
Price Performance
McDonald's Growth Projection Encourages
In the past 7 days, the company's earnings for 2025 and 2026 have increased by 2 cents and 3 cents to $12.23 and $13.20, respectively. The Zacks Consensus Estimate for MCD's 2025 and 2026 earnings per share indicates year-over-year increases of 4.4% and 7.9%, respectively.
The consensus estimate for revenues is pegged at $26.34 billion and $27.81 billion for 2025 and 2026, implying year-over-year improvements of 1.6% and 5.6%, respectively.
Factors Acting in Favor of MCD
The company continues to focus on expansion efforts to drive growth. McDonald's believes that there is a huge opportunity to grow all its brands globally by expanding its presence in existing markets and entering new ones. Its expansion efforts continue to drive performance. Despite unfavorable scenarios, the company continues to expand its global footprint. McDonald's plans to open 2,200 restaurants globally in 2025, which includes a quarter of these openings in its US and IOM segments. It aims to open 50,000 restaurants by 2027.
McDonald's aims to enhance its core menu offerings to drive growth. In January 2025, the company launched its McValue platform in the United States to provide consistency and compelling customers with flexibility over choices.
Then again, the company continues to excel in delivering a superior customer experience with notable operational improvements, improved service times and increased customer satisfaction across most major markets.
The focus on core menu items has enhanced kitchen execution, exemplified by the Best Burger initiative. In more than 80% of markets, this training highlights fundamental standards, and boosts taste and quality perceptions. McDonald's plans to roll out the initiative to nearly all markets worldwide by the end of 2026, strengthening consistency and execution across its global footprint.
Continued investment in digital, tech and global business services is expected to drive long-term efficiencies. MCD is enhancing its delivery services to provide greater convenience and improve the customer experience. With an emphasis on expanding delivery options and strengthening digital capabilities, the company is focused on creating seamless ways for customers to access its offerings.
Over the past year, the delivery sales mix has doubled in Australia, Canada and the United States. McDonald's expects to increase the percentage of system-wide delivery sales originating from its mobile app to 30% by 2027.
McDonald's is leveraging its loyalty program and digital initiatives to drive customer retention and expand its base. By enhancing the customer experience across multiple channels, the company is creating more value for loyalty members and increasing engagement through innovative digital solutions.
Since launching its loyalty program, MCD has seen significant growth. In 2024, sales to loyalty members reached $30 billion. With the continued rise in digital adoption, McDonald's is optimistic about the long-term success of its loyalty program. System-wide sales from loyalty members across 60 participating markets were more than $31 billion over the trailing 12 months, with approximately $8 billion generated in first-quarter 2025. The company expects to expand its active user base to 250 million and achieve $45 billion in annual sales by 2027.
MCD Stock Trades at a Discount
McDonald's is currently valued at a discount compared with its industry on a forward 12-month price-to-earnings basis. The company's forward 12-month P/E ratio stands at 25.03X, lower than the industry's average of 26.15X. Meanwhile, Starbucks, Yum! Brands and Restaurant Brands are trading at P/E ratios of 30.03X, 23.57X, and 18.38X, respectively.
P/E (F12M)
Traffic Decline Concerns MCD
In the first quarter of 2025, McDonald's experienced a decline in global comparable sales due to weaker-than-expected industry traffic in several key markets. In the United States, traffic from low-income consumers fell nearly 10% year over year, and middle-income traffic also dropped sharply, highlighting growing economic pressures on a broader swath of consumers.
While high-income consumers remained resilient, the widening disparity in traffic trends underscored the uneven effects of inflation and financial uncertainty. MCD acknowledged that affordability is critical in this environment and has responded by reinforcing its value platforms to help win back frequency from pressured consumer cohorts.
End Notes
McDonald's is a fundamentally strong company with a resilient business model, robust global expansion plans and solid digital and loyalty strategies that are driving customer engagement and operational efficiency.
However, despite its strong long-term prospects and near 52-week high trading levels, the recent dip in traffic, particularly among lower and middle-income consumers, raises caution amid a pressured macro environment.
While existing shareholders can confidently hold the stock as McDonald's continues to execute well and improve its customer experience, potential investors may want to wait for a more favorable entry point, given the short-term headwinds. MCD currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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