Core Viewpoint - McDonald's stock has experienced a 12% decline year-to-date, currently priced around $260 per share, indicating limited near-term gains due to rising costs and consumer pushback against price increases [1][2] Financial Performance - In Q1 2024, McDonald's revenue grew 5% year-over-year to $6.2 billion, driven by a 2% increase in global comparable sales, marking the 13th consecutive quarter of same-store growth [3][4] - The adjusted bottom line for Q1 2024 grew 2% year-over-year to $2.70 per share [3] - Forecasted revenues for fiscal year 2024 are $26.9 billion, representing a 5% year-over-year increase, with expected EPS at $12.21 [4][5] Market Position and Valuation - McDonald's shares are trading at a forward price-to-earnings ratio of 22x, which is below the five-year average of 28x, suggesting potential for long-term price appreciation [1] - The revised valuation for McDonald's is set at $280 per share based on the expected EPS and a P/E multiple of 22.9x for fiscal year 2024, indicating a nearly 7% upside from the current market price [5] Competitive Landscape - McDonald's has underperformed compared to the S&P 500 in recent years, with stock returns of 25% in 2021, -2% in 2022, and 13% in 2023, while the S&P 500 saw returns of 27%, -19%, and 24% respectively [2][3] - The company faces challenges from rising costs and slowing traffic across major markets, including the U.S., U.K., Australia, Germany, Canada, and Japan [1][3]

Core Insights - Fast-food and casual dining chains are successfully attracting customers with affordable meal deals amid ongoing inflation pressures [1][4] - McDonald's, Starbucks, Chili's, and Buffalo Wild Wings have reported increased foot traffic following the introduction of value-oriented promotions [1][2][3] McDonald's - McDonald's launched a $5 Meal Deal on June 25, which includes a McDouble or McChicken, a four-piece nugget, a small fry, and a small beverage, resulting in an 8% increase in visits compared to the year-to-date Tuesday average [1] - The deal contributed to an average of at least 5% more visits throughout the launch week [1] - Additionally, McDonald's introduced Free Fries Friday, offering a free medium fry with a $1 minimum purchase for app users, valid through the end of the year [1] Starbucks - Starbucks experienced a significant increase in foot traffic with its half-off iced drinks promotion on Fridays, which began on May 10, leading to a 20% spike in visits compared to the year-to-date average [1][2] - Prior to the promotion, visits on May 3 were 1.1% below the year-to-date average [1] Chili's - Chili's revamped its "3 for Me" value menu in April, introducing new options like the Big Smasher burger, with meals starting at $10.99 [2] - The week before the update saw a 4.7% increase in visits compared to 2023, while the week of the update experienced a 17.3% increase over the 2023 average [3] Buffalo Wild Wings - Buffalo Wild Wings introduced an unlimited boneless wings deal for $19.99 on Mondays and Wednesdays, which led to an 8% increase in foot traffic immediately after the launch [3] - Visits on Mondays and Wednesdays spiked by 45.6% and 49.3% respectively, and remained above average for seven weeks following the deal's introduction [3] Industry Context - The restaurant industry is responding to long-lasting inflation, which has seen food prices rise by 25% from 2019 to 2023, with grocery and fast-food prices sharply increasing since the pandemic [4] - The average price of a McDonald's Big Mac has risen to $5.29, reflecting a 21% increase since 2019 [4] - Despite inflation easing to around 2.6%, restaurants are focusing on affordable meal deals to attract cash-strapped customers [4]

Market Overview - The stock market is experiencing a surge, driven by investor optimism regarding potential interest rate cuts from the Federal Reserve, but historical trends indicate that such cuts often precede recessions [1] - Despite a strong labor market and positive trends like re-industrialization, there are concerns about GDP performance and the possibility of a recession [1] Stocks to Buy - **ThredUp (TDUP)**: An online resale platform that has shown resilience in a challenging economic environment, reporting Q1 revenue of $79.6 million, a 5% year-over-year increase, and gross margins of 69.5%. The company is narrowing its losses, with adjusted EBITDA loss down to $0.7 million [2][3] - The resale market is projected to more than double its market share, reaching $350 billion globally by 2028, positioning ThredUp to benefit from the shift towards secondhand goods [3] - **McDonald's (MCD)**: Recently launched a $5 meal deal to attract budget-conscious consumers. Despite a 13% year-to-date decline, McDonald's has historically performed well during economic downturns, suggesting potential for recovery [5] Stocks to Avoid - **Coinbase (COIN)**: The leading U.S. cryptocurrency exchange has seen its stock rise 181% over the past year, but faces significant challenges including decreased trading volumes and ongoing legal issues with the SEC. Insiders sold $383 million worth of shares in Q1, indicating potential lack of confidence [6][7] - **Robinhood (HOOD)**: The online brokerage reported record Q1 revenues of $618 million, a 40% year-over-year increase, but its business model faces scrutiny due to regulatory risks and reliance on volatile markets. The company is under investigation by the SEC, which raises concerns about its sustainability in a downturn [9][10]

Company Performance - McDonald's stock closed at $251.53, reflecting a -0.93% change compared to the previous day, underperforming the S&P 500's gain of 0.28% [1] - Over the last month, McDonald's shares increased by 0.13%, lagging behind the Retail-Wholesale sector's gain of 1.3% and the S&P 500's gain of 3.78% [1] - The upcoming earnings report is scheduled for July 29, 2024, with projected earnings per share (EPS) of $3.10, a decrease of 2.21% year-over-year, and expected quarterly revenue of $6.68 billion, an increase of 2.83% from the previous year [1] Fiscal Year Estimates - For the entire fiscal year, the Zacks Consensus Estimates project earnings of $12.17 per share and revenue of $26.6 billion, representing increases of +1.93% and +4.32% respectively from the prior year [2] - Recent changes to analyst estimates indicate a positive outlook for the company's business, with estimate revisions correlated with near-term share price momentum [2] Valuation Metrics - McDonald's has a Forward P/E ratio of 20.86, which is a premium compared to the industry's average Forward P/E of 18.8 [3] - The company has a PEG ratio of 2.86, compared to the Retail - Restaurants industry's average PEG ratio of 1.84 [3] Industry Ranking - The Retail - Restaurants industry ranks in the top 43% of all industries, with a current Zacks Industry Rank of 108 [4] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [4]

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Core Viewpoint - The recent decline in McDonald's stock presents a buying opportunity for both long-term and short-term investors, as the stock has retraced to a significant support level that previously marked a bottom [2][3]. Stock Performance and Technical Analysis - McDonald's stock reached a low of approximately $245 per share in October 2023, rallied to over $300 in early 2024, and has since returned to around $246, indicating a potential bullish double-bottom formation [3]. - The $245 level is seen as a strong support point, suggesting that the stock may rebound from this level again [3]. Reasons for Recent Pullback - The stock's recent decline may be attributed to profit-taking after reaching over $300, as well as a slight earnings miss in Q1 2024, where non-GAAP earnings per share were $2.70, missing the consensus estimate of $2.73 [4]. - Broader economic concerns, such as pressures on lower-end consumers and rising auto loan delinquencies, have also contributed to the stock's weakness [4]. Dividend Status - McDonald's is currently a "Dividend Aristocrat," having raised its dividend for 48 consecutive years, and is on track to become a "Dividend King" by raising its dividend for 50 years [5]. - The most recent dividend increase was from $1.52 to $1.67 per share, with a current yield of nearly 3% [5][9]. Growth Drivers and Catalysts - Menu innovation, such as the introduction of a $5 meal deal, is expected to attract more customers and enhance traffic [6]. - A potential decline in the U.S. dollar could benefit McDonald's, as approximately 59% of its revenues come from international markets [6]. - The launch of the CosMc's concept, which offers specialty drinks and snacks, may provide additional growth opportunities [6]. - McDonald's is positioned to benefit from advancements in AI and automation, which could significantly reduce labor costs in the future [6]. Earnings Estimates and Financial Health - Analysts project earnings per share growth, with estimates of $12.20 for 2024, $13.25 for 2025, and $14.36 for 2026, reflecting year-over-year increases [8]. - The company has approximately $51 billion in debt and about $838 million in cash, indicating a substantial financial position [8]. Share Buybacks - In Q1 2024, McDonald's repurchased approximately $918 million worth of its shares, consistent with its historical practice of stock buybacks [9].

The most recent trading session ended with McDonald's (MCD) standing at $247.85, reflecting a -1.29% shift from the previouse trading day's closing. This change lagged the S&P 500's daily gain of 0.1%. Elsewhere, the Dow saw a downswing of 0.08%, while the tech-heavy Nasdaq appreciated by 0.28%.Prior to today's trading, shares of the world's biggest hamburger chain had lost 2% over the past month. This has lagged the Retail-Wholesale sector's gain of 3.31% and the S&P 500's gain of 4.08% in that time.Analys ...

Life and the market are about compromise. Generally speaking, if you’re looking for high growth, you typically aren’t getting much in the way of dividends, if anything. On the other hand, established enterprises usually offer robust passive income at the expense of growth potential. Still, on rare occasions, it’s possible to have high-yield safe stocks that can also expand the top line.Fundamentally, the math helps the underlying narrative. Presently, we have thousands upon thousands of publicly traded oppo ...

thad Investment Thesis McDonald's Corporation (NYSE:MCD) continues to be one of my favorite stocks at present time despite the surprisingly abundant negative sentiment that appears to be placing downward pressure on shares. The recent Q1 report saw McDonald's generate solid topline revenue growth along with great operational improvements resulting in a wonderful 8% YoY increase in operating income. While total comparable sales growth did slow to 2% YoY, I believe the softening consumer environment is primar ...