Is It Time to Avoid McDonald's Stock?

Core Viewpoint - McDonald's has underperformed the broader market, particularly the S&P 500, over the last five years, indicating a stagnation in growth and investment appeal [2][6][10] Financial Performance - Full-year 2024 revenue was flat at $6.39 billion, slightly below the $6.44 billion estimate, while net income declined 1% to just under $2.02 billion, or $11.39 per share compared to $11.56 per share in 2023 [2][5] - Global comparable sales showed a decline of 1.5% in Q3 and 1% in Q2, reflecting broader weaknesses in sales performance [3][9] Strategic Initiatives - McDonald's introduced a $5 combo meal aimed at value-centric consumers, which has reportedly increased transaction numbers but raises concerns about overall ticket size [4][8] - The average check on $5 discount orders has exceeded $10, but the effectiveness of this strategy in driving overall sales remains uncertain [5][8] Market Position and Competition - J.P. Morgan analysts set a price target of $300 per share for McDonald's, suggesting limited upside potential from current pricing [6] - Analyst estimates predict earnings of $12.28 per share in 2025, resulting in a forward P/E ratio of 24.78, slightly below its historical average [7] - Competitors like Chipotle and Cava are experiencing double-digit revenue growth, positioning them as more attractive investment options compared to McDonald's [9][10]