McDonald’s (NYSE:MCD) Shares Climb 2.9% – Still a Buy?

Shares of McDonald’s Corporation (NYSE:MCD) shot up 2.9% during mid-day trading on Monday. The company traded as high as $265.67 and last traded at $265.5430. Approximately 6,447,981 shares were traded during trading, an increase of 50% from the average session volume of 4,302,200 shares. The stock had previously closed at $258.12.

Key Stories Impacting McDonald’s

Here are the key news stories impacting McDonald’s this week:

• Positive Sentiment: Third-quarter adjusted EPS was $3.57, above the $3.38 analyst estimate, with stronger franchised margins contributing. Global comparable sales rose 1.5%, led by international markets. McDonald’s Q3 Earnings Beat on Franchised Margins, Revenues Miss
• Positive Sentiment: Management says U.S. sales improved as the quarter progressed and is planning more affordable bundles, digital deals, and other value initiatives to attract budget-conscious customers. Investors may view these plans as a path to a domestic rebound. McDonald’s Puts Focus on Entry-Level Value to Lift Sluggish Sales
• Neutral Sentiment: Holiday drink offerings and a Pokémon Happy Meal promotion add seasonal marketing opportunities, though their impact on overall sales is uncertain. McDonald’s Pokémon Happy Meal Returns Nov. 10 With Cards
• Negative Sentiment: Revenue of $7.16 billion fell short of expectations near $7.28 billion. U.S. comparable sales declined 0.2%—the first drop in six quarters—as customers facing high living costs pulled back and restaurant traffic weakened. McDonald’s US sales decline for first time in six quarters despite value push
• Negative Sentiment: Value promotions may pressure economics and come amid reported tensions with franchisees. Separately, a judge allowed a lawsuit challenging McRib marketing to proceed, creating a potential legal and reputational overhang. McDonald’s facing lawsuit over meat in cult-favorite sandwich

Wall Street Analyst Weigh In

A number of research firms have recently commented on MCD. Evercore cut their price objective on McDonald’s from $320.00 to $300.00 and set an “outperform” rating on the stock in a report on Thursday, September 24th. KeyCorp decreased their target price on McDonald’s from $305.00 to $280.00 and set an “overweight” rating for the company in a report on Tuesday, October 6th. UBS Group reiterated a “buy” rating on shares of McDonald’s in a report on Monday, October 19th. JPMorgan Chase & Co. dropped their target price on shares of McDonald’s from $280.00 to $260.00 and set an “overweight” rating for the company in a research report on Thursday, September 24th. Finally, Citigroup cut their price target on shares of McDonald’s from $305.00 to $295.00 and set a “buy” rating on the stock in a report on Tuesday, October 20th. One research analyst has rated the stock with a Strong Buy rating, twenty-two have assigned a Buy rating, thirteen have given a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat, McDonald’s has a consensus rating of “Moderate Buy” and an average price target of $293.21.

McDonald’s Stock Up 6.5%

The stock has a 50 day simple moving average of $248.20 and a 200 day simple moving average of $282.85. The company has a market cap of $198.28 billion, a price-to-earnings ratio of 20.96, a PEG ratio of 3.01 and a beta of 0.42.

McDonald’s (NYSE:MCD) last posted its earnings results on Wednesday, November 4th. The fast-food giant reported $3.57 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $3.38 by $0.19. The business had revenue of $7.16 billion during the quarter, compared to analyst estimates of $7.28 billion. McDonald’s had a negative return on equity of 572.06% and a net margin of 31.72%. The company’s revenue for the quarter was up 1.1% compared to the same quarter last year. During the same quarter last year, the firm earned $3.22 earnings per share. As a group, equities research analysts expect that McDonald’s Corporation will post 12.82 EPS for the current fiscal year.

McDonald’s Increases Dividend

The company also recently announced a quarterly dividend, which will be paid on Tuesday, December 15th. Stockholders of record on Tuesday, December 1st will be paid a $1.93 dividend. This represents a $7.72 annualized dividend and a dividend yield of 2.8%. This is a boost from McDonald’s’s previous quarterly dividend of $1.86. The ex-dividend date is Tuesday, December 1st. McDonald’s’s payout ratio is currently 60.44%.

Institutional Investors Weigh In On McDonald’s

Large investors have recently added to or reduced their stakes in the company. Bank of New York Mellon Corp purchased a new position in McDonald’s in the second quarter valued at about $1,359,276,000. Bessemer Group Inc. grew its stake in McDonald’s by 132.1% during the 1st quarter. Bessemer Group Inc. now owns 1,325,880 shares of the fast-food giant’s stock valued at $412,071,000 after purchasing an additional 754,596 shares in the last quarter. State Street Corp grew its stake in McDonald’s by 1.8% during the 2nd quarter. State Street Corp now owns 36,080,505 shares of the fast-food giant’s stock valued at $9,752,921,000 after purchasing an additional 646,675 shares in the last quarter. Arrowstreet Capital Limited Partnership increased its holdings in McDonald’s by 17.2% during the 1st quarter. Arrowstreet Capital Limited Partnership now owns 3,637,785 shares of the fast-food giant’s stock worth $1,130,587,000 after purchasing an additional 533,448 shares during the last quarter. Finally, Ascentis Wealth Management LLC increased its holdings in McDonald’s by 23,222.1% during the 2nd quarter. Ascentis Wealth Management LLC now owns 478,103 shares of the fast-food giant’s stock worth $129,236,000 after purchasing an additional 476,053 shares during the last quarter. 70.29% of the stock is owned by institutional investors and hedge funds.

McDonald’s Company Profile

McDonald’s Corporation is a global quick-service restaurant company that operates and franchises restaurants under the McDonald’s brand. Its restaurants serve a menu that includes hamburgers, cheeseburgers, chicken sandwiches, French fries, breakfast items, desserts, salads, beverages and coffee. Offerings vary by market, and many locations provide drive-thru service, delivery and digital ordering through the McDonald’s mobile app.

The company operates through a heavily franchised business model, with restaurants owned and operated by independent franchisees, affiliates and the company itself.