Will easing restrictions continue to drive McDonald’s growth?

[Updated 06/02/2021] McDonald’s Update

Mcdonalds (NYSE: MCD), a global fast food chain, has seen its inventory continuously increase over the years. It has risen 36% since late 2017 and at the current price of $ 234 we believe it has upside potential of around 9%. The company had seen revenue drop from $ 22.8 billion in 2017 to $ 21.4 billion in 2019 due to the re-franchising of nearly 95% of total restaurants around the world. In 2020, revenues fell to $ 19.2 billion, mainly due to the Covid-19 pandemic which saw various restrictions placed on restaurants around the world. A recovery was seen in the second half of 2020 and momentum continued in the first quarter of 2021 as the company beat consensus estimates with revenue of $ 5.1 billion, up 9% year-over-year, while diluted earnings were $ 2.05 per share versus $ 1.47 per share during the same period last year. Our dashboard Buy or sell McDonald’s shares has the underlying numbers.

We believe the company will experience positive revenue and profit growth as restrictions continue to ease and the vaccination campaign continues. We are waiting McDonald’s revenues to increase by 10.5% to $ 21.2 billion in 2021. In addition, its net profit is expected to reach $ 5.5 billion as the recovery from Covid-19 accelerates, increasing its earnings per share to $ 7.48, which, coupled with the P / E multiple of 34.3 x will lead to McDonald’s Rating around $ 256, more than 9% above its current market price.

[Updated 03/05/2021] McDonald’s Update

At the current price of around $ 205, McDonald’s shares (NYSE: MCD) has a potential upside of around 24%. McDonald’s, a global fast food company, has seen its stock increase by 16% from 2018 to present, compared to the S&P 500 which has gained 50% since late 2018. The company has seen its revenues fall in recent years so that his P / E ratio increased.

Due to the Covid-19 crisis, McDonald’s saw revenue drop 9% in 2020 to $ 19.2 billion, while earnings per share fell to $ 6.35 from $ 7.95 a year former. The drop is mainly due to the closure of restaurants during the Covid-19 closings and to the drop in attendance due to continued restrictions in various regions.

We forecast McDonald’s revenue to grow 10.6% to $ 21.2 billion in 2021. In addition, its net profit is expected to reach $ 5.5 billion as the recovery from Covid-19 accelerates. , increasing its earnings per share to $ 7.48, which, coupled with the P / E multiple of 34.1x will lead to a McDonald’s valuation of around $ 255, almost 24% above its price of current market.

[Updated 11/13/2020] Up 10% in 2020, does McDonald’s stock have more potential?

After rising 10% this year, at the current price of nearly $ 215 per share, we believe McDonald’s shares (NYSE: MCD) has a moderate rise in the near term. MCD stock has fallen from $ 197 to $ 218 year-to-date against the S&P 500 which also rose 10% in 2020. The stock has moved in line with the market despite declining income on the first 2 quarters of 2020. For the third quarter of 2020, revenues were almost flat at $ 5.4 billion, while profits improved to $ 2.37 from $ 2.13 during the same period of the previous year. Both revenue and profit recovery were driven by 4.6% system-wide sales growth in the United States. We expect system-wide sales to continue to rebound in the fourth quarter of 2020, and the share price will rise at the same time.

The 27% increase in the MCD share price between 2017 and 2019 is justified by significant earnings growth in these two years. McDonald’s revenues decreased 7.6%, from $ 22.8 billion in 2017 to $ 21.1 billion in 2019. This effect was offset by margins falling from 22.8% to 28.6% over the course of this period. Per share, earnings fell from $ 6.43 to $ 7.95. The increase in margins is due to an overall increase in the number of restaurants and continued refranchise.

During the same period, the P / E multiple increased from 27x to 25x. The P / E has improved in recent weeks as the business and industry show signs of recovery. Currently, the multiple is 27x.

Where is the stock going?

The global spread of the coronavirus has resulted in lockdowns in various cities around the world, which has affected industrial and economic activity. This is likely to negatively affect consumption and consumer spending. McDonald’s revenue and profits were hit in the first half of 2020, but in the third quarter of 2020 it saw stable revenue and profit growth compared to the same period in 2019. The third quarter of 2020 also saw sales system-wide rebound (up 4.6% year-on-year) in the United States. market compared to Q2 2020, where we saw a significant drop due to blockages affected in all regions.

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